Tags: TV | Streaming | Aereo | Bankruptcy

Aereo Signal Fades, Seeks Bankruptcy After Supreme Court Loss

Friday, 21 Nov 2014 07:47 AM

Aereo Inc., the Barry Diller-backed startup that aimed to upset the television industry, sought bankruptcy protection after the U.S. Supreme Court agreed with broadcasters that its online-streaming TV service violated programming copyright protections.

Aereo filed bankruptcy “to preserve estate value as it works toward its goal of consummating a sale of substantially all of its assets, recapitalizing or entering into some other reorganization transaction,” Chief Financial Officer Ramon A. Rivera said in a court filing.

The Supreme Court in the 6-3 ruling on June 25 rang the death knell for Aereo, handing a victory to broadcast giants including CBS Corp., Walt Disney Co.’s ABC, Comcast Corp.’s NBCUniversal and 21st Century Fox Inc.

Aereo’s failure eliminates an alternative to cable and satellite bundles, which can cost $100 a month and include channels most subscribers don’t watch. The Internet startup strived to revolutionize broadcast TV viewing, offering live and recorded broadcast programs for as little as $8 a month.

The company designed its business to bypass federal law that gives copyright holders the exclusive right to perform its work publicly. The startup used individual dime-sized antennas for each customer to provide service in 11 cities and planned to expand into other markets, without paying retransmission fees for the programming.

Equity Investments

Aereo funded most of its operations through a series of equity investments, raising about $96 million, according to Chapter 11 documents filed in U.S. Bankruptcy Court in Manhattan. The company said it has about $4.2 million in debt and its assets are worth about $20.5 million based on its cash, equipment, intellectual property and business prospects.

In February 2012, Diller’s IAC/InterActiveCorp led a $20.5 million round of financing for Aereo. Diller also joined the New York-based company’s board. The billionaire said the ruling wouldn’t result in a significant financial loss.

Aereo’s biggest shareholder is Chief Executive Officer Chet Kanojia, with a stake of about 42 percent, followed by Diller’s IAC with about 23 percent ownership and FirstMark Capital I LP with about 13 percent, according to court papers.

Diller, 72, the co-creator of the Fox Broadcasting Co. and former chairman and CEO of the film studio Paramount Pictures Corp., lamented the Supreme Court’s decision, saying at the time in a statement it would stifle innovation and ultimately hurt consumers the most.

Service Canceled

Since the Supreme Court ruling, the company canceled its service and has focused on defending against the broadcaster’s lawsuits, causing the company to reduce its workforce to 14 from 74.

The startup has been considering how it can revive the business, working on “new legal strategies and potential new business models consistent with the Supreme Court’s decision,” Rivera said in a court filing.

Aereo claimed its technology was created with legal compliance in mind, making it analogous to the antennas citizens already attach to their roofs that allow them to access local broadcast channels for free.

From the start the company reached out to broadcasters and “painstakingly followed the law in building its business, only to have the law change under its feet,” Rivera said in court papers.

The case is In re Aereo Inc., 14-13200, U.S. Bankruptcy Court, Southern District of New York (Manhattan).


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Aereo Inc., the Barry Diller-backed startup that aimed to upset the television industry, sought bankruptcy protection after the U.S. Supreme Court agreed with broadcasters that its online-streaming TV service violated programming copyright protections.Aereo filed bankruptcy...
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Friday, 21 Nov 2014 07:47 AM
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