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TV Network Exec Argues That Anything That Causes Cable Subscribers To Cut The Cord Is Illegal

from the felony-interference-with-a-business-model dept

Okay, let’s start this out right by noting that the headline is only slight hyperbole. We’ve already talked about the TV networks suing Aereo for letting people connect, via the internet, to a TV antenna that picks up over-the-air (i.e., free) TV programming in NYC. I still can’t quite figure out what the legal argument is here, other than that it upsets their business model. Watching over-the-air TV programming is, obviously, perfectly legal. We’ve yet to see a competent claim that place shifting legal TV is illegal. About the only real complaint is that this has the chance to drive more people to cut the cord, rather than pay ridiculously high cable/satellite TV prices. Of course, the networks these days thrive because of the insanely high carriage fees they get to charge the cable/satellite guys to include their network programming.

But, you know, disrupting the TV networks business model isn’t illegal.

Yet, as with the DISH Networks case, wherein the networks seem to be claiming that skipping commercials is illegal, the networks in the Aereo case don’t seem to have much of an argument other than “this disrupts our business model.”

In a hearing about whether or not the court should issue a preliminary injunction (as has happened in the similar, but different in important ways, ivi and Zediva cases) the judge didn’t just roll over for the networks, and allowed Aereo’s lawyers to grill an exec from CBS, who more or less admitted that they think (1) the DVR is a bigger threat than Aereo and (2) that their main issue is that Aereo may lead to more cord cutting.

But, again, getting more people to cut the cord isn’t illegal. This is, once again, appearing like a “felony interference with a business model” case. The network exec actually tried to make the argument on the stand that the fact that someone might cancel their cable subscription to use Aereo (cord cutting) is a form of “harm” that requires Aereo be shut down by preliminary injunction. Thankfully, the judge wasn’t buying that logic:

The judge also got into the act somewhat, addressing broadcasters’ insistence that any customer who cancels his or her cable service to sign up with Aereo is a problem. How does subtracting one subscriber impact advertising, asked the judge, which caused the CBS executive to admit that it would have to be one Nielsen household that canceled for impact, and later that it would more likely have to be a substantial number of defections.

There was some other damning info that came out in the hearing, including the fact that the TV networks refused to even talk to Aereo, never sent a cease & desist, and only decided to sue once they found out that Barry Diller was backing Aereo. Hopefully, the judge refuses the injunction. At the very least, it’s good that he’s not willing to just roll over and kill innovative startups because they mess with the entertainment industry’s business model.

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Companies: aero, dish networks

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Comments on “TV Network Exec Argues That Anything That Causes Cable Subscribers To Cut The Cord Is Illegal”

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97 Comments
:Lobo Santo (profile) says:

Re: ...

Well, anybody who’s backed up by those with a self-declared monopoly on force CAN take any specified amount of money from you on a monthly basis. (see: taxes)

The cables companies are only stupid and deluded as long as they don’t have absolute backing from the government. With enough lobbying, “cutting the cord” could very well become illegal.

Just imagine the SWAT team led by your local sheriff kicking in your door at 3am and dragging you off to jail because you refused to pay for cable TV!

Unlikely as it is, it could happen…

Beech (profile) says:

How to stop global warming:

1) Tell TV execs that global warming will make nice weather all year ’round
2) More nice weather will mean that more people will spend time out side, and may cut their cables because they don’t need TV since they’re spending so much time outdoors
3) TV companies will sue global warming because it “may or may not” possibly make at least one but maybe a billion people stop paying for cable.
4) Global warming will be declared illegal. Problem solved.

Anonymous Coward says:

it will make a nice change if the judge does act in the way it is hoped he will. i am curious to see what the entertainment industries manage to say to condemn him and how much blame they will put on him for encouraging ‘piracy’ (siding with Aereo) when it is ‘killing the industries’. i am also interested to see how much notice is taken of the network exec (who was it? didn’t see a name mentioned) by some senator or other, as opposed to the judge and Aereo’s lawyers, who gets a new fast track Bill introduced as protection for the networks.

Anonymous Coward says:

So does Aereo pay for the content it retransmits? Or do they simply take it for free and monetize for their own benefit. If a cable station or Netflix broadcasts a program. I’m sure that either they produced it themselves (incurring a cost) or bought the rights to retransmit (incurring a cost). Sounds like more freeloading for commercial gain to me.

Another AC says:

Re: Re: Re: Re:

Of course they deliberately capture it. It’s a free signal transmitted to them for free.

In the US (also in Canada) statute specifically calls out that over the air transmissions are NOT subject to retransmission rights.

Maybe your point is that it doesn’t seem right, but it is perfectly legal. Again, no freeloading here.

Anonymous Coward says:

Re: Re: Re:2 Re:

This is what your own citation says:

“Who pays retransmission royalties?

According to the Copyright Act, anyone who legally retransmits a ?distant signal? is required to pay royalties to the owners of the programming contained within that transmission. Companies that ?retransmit? such signals are usually cable television operators and direct-to-home satellite television providers. Other media providers, such as webcasters, will be subject to similar requirements. Similar laws apply in outside the U.S.”

Further that a ‘distant signal’ is one that cannot be captured with a home antenna (typically 40-60 miles).

Thanks for making my point so eloquently.

Another AC says:

Re: Re: Re:3 Re:

lol not quite.

“Since each subscriber will use his or her own dedicated dime-sized antenna, located at Aereo?s Brooklyn, N.Y., head end, to receive their signal, the company says it is not subject to the same retransmission responsibilities as say, Comcast or DirecTV).”

Captured with a ‘home antenna’ at a ‘short distance’.

Your move 🙂

Another AC says:

Re: Re: Re:5 Re:

Again: “each subscriber will use his or her own dedicated dime-sized antenna, located at Aereo?s Brooklyn, N.Y…”

So yes, it is.

But let’s take the silliness to a new level. Does it change things if each user drives down to the Aereo office and affixes their antenna and presses the button to stream the content to their home? From that perspective Aereo is simply a rental company renting out space to customers, yet the results are exactly the same. At what point is it infringement on retransmission rights? That’s what we disagree on.

That’s the thing with copyright – silly things like this suddenly matter when they shouldn’t.

Anonymous Coward says:

Re: Re: Re:6 Re:

I’ll indulge your silliness. Aereo is capturing the signal and retransmitting a broadcast FOR A PROFIT. While I don’t know the specifics of the law, personal use and for profit are usually regarded as two distinct issues under law. If Aereo so modified its business model as you described, I’d say that acting as the vector for large-scale retransmission for profit is not much different than what they are doing now. And why should Aereo enjoy a competitive advantage? They compete for viewers of cable and satellite who pay a fee for retransmitting those broadcasts. What are they doing that is materially different… other than not paying for content? Checkmate.

Another AC says:

Re: Re: Re:7 Re:

In this scenario Aereo isn’t retransmitting anything, you can insist it all you want but you would be wrong. But even granting it makes a difference somehow, if Aereo didn’t collect money from users but from inserting advertising for example, then you get into even more grey area.

You think you checkmated but you lost your king hours ago and just haven’t realized it yet 😀

Anonymous Coward says:

Re: Re: Re:8 Re:

In this scenario Aereo isn’t retransmitting anything,

How does the signal from the antenna get from Aereo’s office in Brooklyn to my computer on Long Island? Even given your idiotic scenario, when the user “pushes the button” it is a button on Aereo servers that is retransmitting the signal. In any event, that’s not how it works, Aereo provides the antenna, captures the broadcast and retransmits the signal over the internet to the end user for a $12 fee.

The bottom line is that Aereo seeks a competitive advantage over cable and satellite by not paying for content. Apparently they don’t think that they can compete on a level playing field.

Another AC says:

Re: Re: Re:9 Re:

Actually, it isn’t Aereo’s antenna, it’s the customers. But the point is the law turns on that distinction and that’s what’s truly silly. You think one way, I think another.

Also, you see it as they won’t compete on a level playing field. I see it as they don’t have to, so it’s fair to have that advantage. Honestly, if the satellite/cable providers don’t like it, get rid of retransmission fees altogether then! Done and done.

Of course, that thought probably won’t even cross their minds will it?

Anonymous Coward says:

Re: Re: Re:10 Re:

I believe that the antenna is leased. And the issue of the actual retransmission of the over-the-air signal by Aereo still remains unaddressed by you. Retransmission fees by cable and satellite are settled matters of law. At some level, fundamental fairness has to be an issue. Either Aereo, cable and satellite should all pay retrans fees or none should. As long as Aereo captures and pushes the broadcasts out the door over the internet, it has the same effect as beaming it to home antenna dishes or transmitting a signal to cable boxes.

Another AC says:

Re: Re: Re:11 Re:

I have already addressed the retransmission. But I will restate again:

The antenna is sold to the customer. The customer uses *their* antenna to retransmit free over-the-air signals to themselves. This is allowed by law and does not require retransmission fees.

Again, leasing the antenna vs. selling it and leasing the physical space to keep it in is largely semantics. Either way both are exactly the same net result as what you just stated, except it’s the customer doing it one way and it’s Aereo doing it in the other. The law seems to clearly state that one is allowed yet the other is not.

Anonymous Coward says:

Re: Re: Re:12 Re:

If you read the EFF brief, it is interesting that the whole distant antenna distinction is not even mentioned. That indicates to me Aereo’s model contemplates a subscriber base worldwide, which makes sense. The focus of that brief is on private/public performance. The former not covered by copyright, the latter covered. This is substantially the argument that failed in the Zediva case. I think that while your scenario where an individual erects an antenna remotely and uses his own equipment to retransmit it to himself is protected activity. I think that when Aereo performs the same function and offers that service for sale to the public using its own transmission equipment, that the wheels come off of the argument.

Anonymous Coward says:

Re: Re: Re:12 Re:

I have already addressed the retransmission. But I will restate again:

No you’ve avoided it….again.

The antenna is sold to the customer. The customer uses *their* antenna to retransmit free over-the-air signals to themselves. This is allowed by law and does not require retransmission fees.

That is wrong. The antenna captures the signal from the airways. The antenna doesn’t retransmit shit. The content captured by the individual antenna is retransmitted by Aereo OVER THE INTERNET to the subscriber’s computer. Why is this so hard for you to grasp?

Franklin G Ryzzo (profile) says:

Re: Re: Re:13 Re:

Even if your assertion is correct, the point is still moot. The law says that retransmission rates only apply to distant signals. Distant signals would mean retransmitting Seattle television in New York. Aereo is retransmitting local broadcasts that their subscribers could receive themselves with a roof mounted antennae. They are charging for the convenience of setting up an offsite antennae so their clients don’t have to worry about falling of their roof or trying to install one so that isn’t blocked by buildings or signal interference. That is why they are not subject to fees.

Anonymous Coward says:

Re: Re: Re:14 Re:

Read EFF’s amicus brief. It’s not even a contention. In fact, I believe based on my reading that EFF and Public Knowledge think it is perfectly fine for someone in Seattle to subscribe to this service. I infer from the brief that the sole issue is the difference between a public and private exhibition. The former requires retrans consent, the latter does not. With cable and satellite they take one signal and deliver it to many homes making it “public”. With Zediva and now Aereo, they use individual devices (dvd players or antennas) and send the signal to a single subscriber. Zediva at least paid for the DVD’s, Aereo pays for nothing. At the end of the day, no matter what the outcome of the litigation I think this will be the subject of legislation in the near future. There’s a issue of fundamental fairness when one competitor pays for content and another does not. There’s a lot of talk about competing on this site. And paying (or not) for the product you sell goes to the heart of competition.

BTW, how does Aereo know where the signal is accessed from once they retransmit over the Internet? They have no control over that.

Anonymous Coward says:

Re: Re: Re:10 Re:

So Aereo’s size or scale somehow relieves them of the duty to pay for the same content as the competition? So under your theory, an independent, single screen theater shouldn’t have to pay for the rights to exhibit MIB 3 because they are so much smaller than Regal Cinemas or AMC?

LDoBe (profile) says:

Re: Re: Re:5 Re:

I think that you have a fundamental misunderstanding of the term BROADCAST.
As in BROADLY CASTING the signal to the public for anyone to access.
If it’s in the air, anyone can do anything they want with it. Doubly so if it’s broadcast to the public and not some pseudo-private signal.
Restricting a broadcast to just a small area doesn’t make ANY sense. If the point were to do that, then they should make up a bullshit legalese jargon term, perhaps “publicly oriented narrowshoot” or something else braindead like that.
What next? Are you going to claim that if the government wanted to it could ban the retransmission of special shade of aubergine outside of the small area it’s being blasted into?

Anonymous Coward says:

Re: Re: Re:8 Re:

No, I’m saying that if it’s retransmission for cable, it seems like it’s retransmission for Aereo. In any event, I don’t see why Aereo is unable to compete paying the same fixed costs for content as satellite and cable. What entitles them to preferential treatment?

Anonymous Coward says:

Re: Re: Re:10 Re:

Not doing something because the law says they aren’t obligated to (even if others are) isn’t called preferential treatment, it’s called reality.

Isn’t that the core of the litigation? That is certainly not a settled matter of law. And at some level, the court will consider whether it is fair for business offering, in part, identical products for one competitor not to have to pay for content while the other do.

zeitgeyser (profile) says:

Re: Re:Aereo retransmission business model

Anonymous coward wrote: So does Aereo pay for the content it retransmits? Or do they simply take it for free and monetize for their own benefit. If a cable station or Netflix broadcasts a program. I’m sure that either they produced it themselves (incurring a cost) or bought the rights to retransmit (incurring a cost). Sounds like more freeloading for commercial gain to me.

What’s wrong with this business model? It’s exactly the same business model many internet co.s use including Google, Yahoo and Bing to name just the big search engines. They all just pick up MY (and your) personal information, monetize for their own benefit… If companies are selling my information I wanna know where my cut is. i wanna be able to have a say in who it’s sold to (or if it is sold to anybody) and what the price point is. Just sayin…

JEDIDIAH says:

Re: Classic Bridge Trolls

Why should they pay?

It’s already being given away freely to everyone in the form of a broadcast. All this service does is ensure that you can actually receive this signal where you happen to live.

It only replaces what would be already happening under ideal physical conditions.

Anonymous Coward says:

Re: Re: Classic Bridge Trolls

You need to read up on the distinction between “giving” and licensing for private use. If you give me something, you’re surrendering your rights of ownership. If you license (lease, rent) something to me, you still have your ownership rights and there are constraints on my use of your property.

Nick (profile) says:

From my experience as a phone tech (yes, customer support) for DirecTV, the best argument against Aereo was that there are actual federal laws prohibiting anyone outside of a specific TV broadcast marketplace from getting ANYONE ELSE’S local TV channels. Seems the big affiliates (Fox, CBS, ABC, etc) got congress to pass a law to such an effect. That way, you can only watch the channels and thus commercials marketed to your home city area.

DirecTV, in order to make sure customers didn’t game the system by claiming residency in another state to get their local channels (for example to watch a football game playing on a local channel there) was forced to do spot beaming, which is where they will only beam the channels for a local market to an area around that market.

This of course results in people that travel and use portable dishes, such as in RV’s, completely out of luck. It was impossible to get their home channels, and considered illegal for us to change the account address to allow their receiver to get the local stations of the area they were in.

Nick (profile) says:

Re: Re: /-:

That is certainly a possibility. I was not at all trying to shill for big corporations here that tend to have the money and power to get what they want done when they want it. Just putting out there that, if they can be believed, the official word from DirecTV reps was that place-shifting of local television was illegal because of federal laws regarding broadcasting.

I certainly don’t see how this law could possibly be in the public’s best interest at all. I am surprised however that in the Aereo case it wasn’t flat out claimed that it was against federal law, thus being a US v Aereo case instead of corporation v Aereo case.

Anonymous Coward says:

Re: Re: Re: /-:

Its considered in the publics interest because of local advertising, and emergancy warning systems.

If you are watching NY and LA broadcast and you are in denver, the denver businesses paying for commercials aren’t getting access to the viewers that are watching in their area which hurts them and the local network affiliate.

You are also less likely to see emergency warning singals.

It sucks for sure, but that was part of the reasoning for it.

Gwiz (profile) says:

Re: Re:

DirecTV, in order to make sure customers didn’t game the system by claiming residency in another state to get their local channels (for example to watch a football game playing on a local channel there) was forced to do spot beaming, which is where they will only beam the channels for a local market to an area around that market.

And they charged the customer an extra $5 per receiver for the privilege of getting the local channels too.

One good side effect was that the transponder for the local stations always had a stronger signal because it was spot beamed and was the last to lose signal in a storm. (I rolled out on service calls for a local HSP for a 3 year stretch about 6 years ago)

Josh in CharlotteNC (profile) says:

Re: Re:

the best argument against Aereo was that there are actual federal laws prohibiting anyone outside of a specific TV broadcast marketplace from getting ANYONE ELSE’S local TV channels.

The last I heard, Aereo only offers the service to people in the NY area that fall into the broadcast area, so that isn’t a valid argument in the case.

I imagine that an over-the-air TV signal in NY city could be pretty spotty, so this seems a good test market for them for many reasons.

Anonymous Coward says:

Re: Re: Re:

Wait…. Aereo has a way to control the location of the computer accessing the antenna? I’m sure that Aereo rolled it out initially in NYC to take advantage of the distance distinction in the Copyright Act, but I doubt its intentions are to limit it to NYC. And given the mobility of access, I doubt a judge won’t see right through this ploy.

All Aereo has to do is pay the same as cable and satellite. What’s the matter, can’t they compete?

Anonymous Coward says:

Re: Re:

“…the best argument against Aereo was that there are actual federal laws prohibiting anyone outside of a specific TV broadcast marketplace from getting ANYONE ELSE’S local TV channels. Seems the big affiliates (Fox, CBS, ABC, etc) got congress to pass a law to such an effect. That way, you can only watch the channels and thus commercials marketed to your home city area.”

Unless, back in 2000, you couldn’t receive the local network affiliate signal over the air, thus allowing you to get an exemption from your local tv station.
(DirecTV didn’t have local feeds back then)
As a result, though I’m based in the Midwest, I still get the East and West Coast network feeds via DirecTV (for an additional fee, of course) as well as the local feeds they added in 2005.

Anonymous Coward says:

The reason why you can’t watch normal broadcast from NYC (aside from those in NYC) is due to FCC power transmission regulations (and probably some technical difficulties with the earth’s curvature).

Do we remember why the switch to digital broadcast was a delayed for months? Because of potential safety concerns with folks not having appropriate equipment. So basically broadcast TV has public safety issues built in. So what better to supplement the safety system that to have an alternate way to access the same broadcast. What if you can’t put an antenna on the roof of your building and don’t want to pay for cable? Indoor antennas aren’t always a good enough solution.

Mega1987 (profile) says:

It’s in our rights if we still want a company’s services or not.

You guys don’t have the RIGHT to tell us that our subscription is For LIFE and you can’t void it..

Jeez… Imagine your cell phone service provider telling you the same thing, that you can’t cut off their services or they’ll sue you for doing so.

You’ll no doubt react as much as most of us, saying that It’s our Right if we still want the services that they provide or not. Not theirs nor it’s a lifetime subscription with no way out.

Anonymous Coward says:

So if it’s ok for Aereo to stream network television over the internet, why do cable companies pay “carriage fees” to the networks in order to include their channels in their cable product? Why don’t cable companies just include the network channels and not pay anything? Is there a law requiring “carriage fees”? And if there is, then doesn’t it apply to Aereo also?

Anonymous Coward says:

Re: Re:

I looked it up. There’s a “must-carry” law in the US that requires cable companies to carry all locally licensed broadcast stations. This law allows broadcast stations to negotiate a “retransmission” price with the cable company. The cable company is allowed to refuse to carry the station if they don’t like the price. Similar “retransmission consent” laws have been put in place for satellite distribution. I’m guessing it’s just a matter of time before they add internet retransmission to this system.

Anonymous Coward says:

“Yet, as with the DISH Networks case, wherein the networks seem to be claiming that skipping commercials is illegal, the networks in the Aereo case don’t seem to have much of an argument other than “this disrupts our business model.” “

Just when you seemed to be coming down from your SOPA induced frenzy, you go and post something silly like this. The argument isn’t “it disrupts our business model”, it is “it voids the contract under which we provide content”.

You really just don’t seem to get it sometimes.

Anonymous Coward says:

Re: Re: Re:

Serveral contracts, really.

Affiliates / local stations, which pay for the network feed, and insert local commercials – their business model is predicated on making money on the OTA commercials to pay for their transmission and studio facilities, their local news, etc. There is a contract with the network in one direction, and the implied contract of OTA broadcasting, which is that only viewers in the area can receive it, the accept it as is, and that as is includes commercials.

Cable / Sat / IPtv: There is also the contact for distribution in this manner. In this case, it’s a question of what exposure and income is generated by the channels being on cable systems, and being made available.

Their right to limit their distribution is valid and true, anything that circumvents that harms their business and harms their rights.

Sometimes you really just don’t think.

Anonymous Coward says:

Re:

I’m not entirely sure what this means. I took it as meaning, for example Comcast didn’t have to pay retrains fees in the metro-Atlanta area to carry TBS but would have to pay retrains fees outside of a 40-60 mile area where antenna capture is possible. That would make sense, otherwise cable and satellite operators would simply set up antennas in the various cities and retransmit nationwide, avoiding the millions in retrains fees that they pay today.

Anonymous Coward says:

I think it’s pretty clear that the retransmission issue is for a company taking in one feed and broadcasting it back out to a wide userbase, like cable and dish providers do. Aereo is taking a signal from an antenna and pushing it to a single user, extending that particular user’s cord to their private antenna.

Anonymous Coward says:

Re: Re: Re: Re:

Poorly, thanks to Hollywood legacy vampires who cannibalized yet another marvelous entertainment startup because it dared to threaten their existing business model.

I’m pretty sure it was a judge who ruled against Zediva, not Hollywood legacy vampires.

BTW, anyone ever tell you that you’re a colossal douchebag?

Probably not as often as people note what a whiney little bitch you are.

Larry Bronemann says:

programming

So when are the cable/internet providers gonna wake up. Where is the protection for the consumer? If I want to watch local over the air AND add a few sports channels (like ESPN) i have to take a package with 200 channels (of which i watch maybe 10) and pay $60/mo.
Where is the “ala-carte” option???

Anonymous Coward says:

Re: programming

So when are the cable/internet providers gonna wake up. Where is the protection for the consumer? If I want to watch local over the air AND add a few sports channels (like ESPN) i have to take a package with 200 channels (of which i watch maybe 10) and pay $60/mo.
Where is the “ala-carte” option???

Actually when you break it down, it’s not all that unreasonable. You watch 10 channels and pay $60. If you watch 2 hours of TV per day, you’re paying a buck an hour for your entertainment. Plus you’re getting another 190 channels thrown in for free- which is probably what they’re worth.

It is pretty discouraging that people think they’re getting ripped off when they’re paying probably less than a buck an hour for content. And I’d wager that there are many users out there for whom that price would be more like $.25-.50 an hour or less. Where else do you get that kind of quality entertainment, year in and out for a price like that?

Kurt says:

Wrong side of history.

Why don?t CBS, FOX, and NBC execs want consumers to enjoy commercial-free TV? It?s what we want! I?m a customer and employee of Dish, and I think AutoHop is great because you can easily watch commercial-free TV. A well known consumer advocacy group, Public Knowledge, agrees that people should have the right to control how they watch TV. They?re taking a stand for consumers by creating a petition that tells CBS, FOX, and NBC media to keep their hands out of your living room and DVR. Sign their petition to keep control of how you watch TV http://bit.ly/KigXAn

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