By William Launder Of DOW JONES NEWSWIRES NEW YORK -(Dow Jones)- A top executive at News Corp.'s (NWS, NWSA) Fox Networks testified Thursday that she had voiced concerns about protecting copyrighted Fox material during an initial conversation last year with the chief executive of Internet TV startup Aereo Inc. Aereo, backed by Barry Diller's IAC Interactive Corp. (IACI), is being sued by a group of major broadcasters on grounds it violates copyright laws by transmitting proprietary broadcast signals to viewers' computers and mobile devices through a network of tiny antennas. The broadcasters--which include Fox, Comcast Corp.'s (CMCSA, CMCSK) NBC, Walt Disney Co.'s (DIS) ABC, CBS Corp. (CBS), and a unit of Univision Communications Inc.--are seeking an injunction to stop the transmission, citing copyright infringement. News Corp. also owns Dow Jones & Co., publisher of Dow Jones Newswires. Sherry Brennan, a senior vice president at Fox responsible for overseeing distribution deals, testified Aereo Chief Executive Chet Kanojia had sounded "angry" when she raised concerns about protecting Fox content and if ratings firm Nielson would measure Fox shows distributed over Aereo, recounting a phone discussion last year, before the launch of the service. Broadcast attorneys used Brennan's testimony in contrast to statements by Kanojia in court Wednesday. He had testified that industry executives and officials, ranging from Comcast CEO Brian Roberts to the Federal Communications Commission, hadn't voiced concerns over his proposed business during discussions about the Aereo business in 2011. Brennan echoed the broadcasters' view that Aereo represents an irreparable harm to their business, which earns money from advertising revenue and so-called retransmission fees that distributors pay networks to carry their content. Aereo doesn't foresee paying retransmission fees, and Nielson currently doesn't measure ratings captured over Aereo technology--meaning broadcasters would see no financial benefit from its service under its current business model. That, Brennan said, could set a harmful precedent for the networks' business. "There's little reason to think other distributors who are paying us those fees would continue to do so," Brennan told the court, recalling recent suggestions from Time Warner Cable Inc. (TWC) CEO Glenn Britt that Aereo's potential legal success would allow other distributors to challenge the retransmission fees they pay broadcasters. Brennan said she was aware that Aereo was already an established company supported by Barry Diller at the time of her conversation with Kanojia last spring. But Fox hadn't sued Aereo at the time, in part because it didn't have active customers then, and because Fox is often presented with plans by potentially threatening distribution ventures that never take off, Brennan said. "We don't rush to sue people because we don't like their idea," she said. Earlier Thursday, an expert witness outlined the history of video-recording devices, ranging from the introduction of the Sony Betamax in the late 1970s to newer technology introduced by Tivo, in an effort to explain Aereo technology. The second day of a two-day hearing in a Manhattan district court also included further debate about if Aereo's technology qualifies as a recording device, rather than a retransmission service, and if it creates a public performance for viewers that would require a special license copyright laws. A bench ruling from Judge Alison Nathan isn't immediately expected after closing arguments Thursday afternoon. -By William Launder, Dow Jones Newswires; 212-416-3412; william.launder@dowjones.com
