By Patrick Fitzgerald
Aereo Inc. has filed for bankruptcy protection five months after
the U.S. Supreme Court delivered the Internet-broadcast streaming
company a fatal blow in its fight with traditional television
broadcasters.
Aereo Chief Executive Chet Kanojia said the court ruling was
insurmountable for the company, which served subscribers through
thousands of dime-size antennas stored in warehouses to capture
local broadcast signals.
"The U.S. Supreme Court decision effectively changed the laws
that had governed Aereo's technology, creating regulatory and legal
uncertainty," Mr. Kanojia said on the company's website. "And while
our team has focused its energies on exploring every path forward
available to us, without that clarity, the challenges have proven
too difficult to overcome."
The ruling in June was a victory for media companies like CBS
Corp., Walt Disney Co.'s ABC, Comcast Corp.'s NBC and 21st Century
Fox's Fox, who said Aereo was unlawfully exploiting their
copyrighted works without permission or payment.
Using individualized antennas, Aereo subscribers could stream
local TV stations' signals through the company's cloud-based
antenna and DVR services for as little as $8 a month. It suspended
the service, whose biggest markets were Boston and New York, after
the Supreme Court ruling.
Aereo filed for Chapter 11 protection late Thursday in U.S.
Bankruptcy Court in New York, listing assets of $20.5 million and
debt of $4.2 million.
The Boston-based company, whose equity backers include Barry
Diller's IAC and funds managed by Highland Capital, raised
approximately $95.6 million in venture cash since its founding in
2010.
In the wake of the Supreme Court's decision, which ruled that
Aereo was "substantially similar" to a cable system and therefore
needed broadcasters' permission to air their content, Aereo pushed
for regulatory change that would offer it the benefits of being
classified as a cable system. These included being able to qualify
for a compulsory copyright license that would allow it to pay
limited royalties for the rights to broadcast content.
The company made some headway. Following a meeting with Aereo
executives in October, the Federal Communications Commission
proposed classifying online live-TV providers as "multichannel
video programming distributors" like cable and satellite providers.
Some Aereo investors said last month they hoped the possibility of
such a classification could create a path forward for the
company.
But in an affidavit filed with the bankruptcy court, Aereo
finance chief Ramon Rivera said that although "the legal and
regulatory framework is shifting" in Aereo's favor, "the timing of
a decision from the FCC is uncertain." Faced with "mounting legal
costs," he said, the company filed for Chapter 11 to aid in
"consummating a sale of substantially all of its assets,
recapitalizing or entering into some other reorganization
transaction for the benefit of its creditors and shareholders."
Those assets consist primarily of its cash on hand, its
equipment and technology, its intellectual-property portfolio and
its business potential, Mr. Rivera said.
Keach Hagey contributed to this article.
Write to Patrick Fitzgerald at patrick.fitzgerald@wsj.com
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