By Sara Randazzo
Aereo Inc., the defunct TV-streaming service that once promised
to revolutionize the way consumers watch network television, was
sold for parts this week to TiVo Inc. and other buyers at a
bankruptcy auction.
TiVo, the pioneering live-TV-recording company, bought Aereo's
trademark and customer lists. Patent-holding company RPX Corp. took
home Aereo's patent portfolio, and Alliance Technology Solutions
bought the company's equipment. The entire sale brought in less
than $2 million, half as much as the minimum Aereo expected to
raise through the auction.
"We are very disappointed with the results of the auction," said
William Baldiga, an attorney for Aereo. "This has been a very
difficult sales process and the results reflect that."
Aereo, which shut down its service in June following a landmark
U.S. Supreme Court loss, still needs to secure the approval of a
bankruptcy-court judge before using the money to pay back
creditors.
Until June, Aereo charged customers a monthly fee to watch and
record broadcast TV through the Internet, without paying
broadcasters any license fees. That business model faltered after a
U.S. Supreme Court ruling found that Aereo violated copyright
laws.
The litigation with the broadcasters--including the Walt Disney
Co.'s ABC, CBS Corp., Fox Television Stations Inc. and Comcast
Corp.'s NBC--is now back in a lower court to determine how much
money Aereo owes in damages, a number that could be in the tens of
millions of dollars. Fox Television Stations Inc. is a part of 21st
Century Fox. Until mid-2013, 21st Century Fox was part of the same
company as News Corp, owner of The Wall Street Journal.
The broadcasters have fought Aereo in every step of its
bankruptcy proceeding. The pushback has prompted a fair share of
chiding from the bankruptcy judge overseeing the case, whose job is
to make sure Aereo's debts are repaid and not to settle past
grievances.
Early on in the bankruptcy, Mr. Baldiga said the company was
talking with at least 17 potential bidders for its technology. The
sale to RPX likely means the patents won't get used to create new
technology. RPX, which bills itself as a "defensive patent
aggregator," is a patent clearinghouse that helps companies protect
themselves from patent lawsuits.
Last week, the broadcasters fought the proposed sale of 8,200
hard drives that still contain programs recorded by Aereo's onetime
customers. Judge Sean Lane in U.S. Bankruptcy Court in New York
gave Aereo clearance to sell the devices--which will bring in
$300,000-- after the company assured him they will wipe the drives
clean before a sale.
At the time of its shutdown, Aereo had a little more than
108,000 subscribers in 14 cities, according to filings with the
U.S. Copyright Office. While small, the company was on an upswing,
increasing subscriptions by 40% in its final six months.
During its 3 1/2 years of existence, Aereo raised $97 million in
venture funding, including investments from Barry Diller's IAC and
funds managed by Highland Capital. Much of that money went toward
litigation expenses, and the company was down to $2.8 million in
cash at the end of January.
Judge Lane is scheduled to weigh in on the sale at a March 11
hearing.
Write to Sara Randazzo at sara.randazzo@wsj.com
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