The supreme court ruled against internet TV service Aereo on Wednesday, handing a victory to major broadcasters who had argued the service violated their copyright and posed a fundamental threat to their businesses.

The court rejected an earlier appeals court decision which had ruled the fledgling service did not breach broadcasters’ copyright. The judges voted 6-3 against the earlier ruling. The ruling effectively means the court sees Aereo as similar to a cable company – and therefore liable to pay for the content it broadcasts.



Broadcasters celebrated the decision. They make hundreds of millions per month from retransmission fees paid by cable companies. In a statement 21st Century Fox called the ruling “a win for consumers that affirms important copyright protections”.

Aereo founder Chet Kanojia called the decision “a massive setback for the American consumer. We’ve said all along that we worked diligently to create a technology that complies with the law, but today’s decision clearly states that how the technology works does not matter.”



He said it sent a “chilling message to the technology industry” and would “continue to fight for our consumers and fight to create innovative technologies that have a meaningful and positive impact on our world.”



But experts predicted the end for Aereo. Jason Buckweitz, associate director for the Columbia Institute for Tele-Information, said if Aereo had to the fees cable firms pay, it would be “dead in 90-days”.



“I’m in complete shock about this decision,” he said. “It’s a major blow for cord cutters.” He predicted the ruling could have a knock-on effect on Slingbox, another TV streaming service.



Major broadcasters had threatened to pull their stations off the air and move to subscription only if they lost the case. The National Football League and Major League Baseball said sports programming would likely migrate from broadcast to cable television if Aereo succeeded.



Aereo, which launched in 2012 in the New York area, has expanded across the US and is now available in cities including Atlanta, Boston, Denver, Houston and Miami.



Each customer can receive broadcast shows via a small digital antennae and store them on a DVR and stream channels on computers and Android or iOS devices, or via Apple TV, Google’s Chromecast and Roku. Monthly plans start at $8 for 20 hours of storage, a fraction of the average cable bill.



Backed by media mogul Barry Diller’s IAC, Aereo has clashed repeatedly with the television networks. Last October broadcasters including ABC, CBS and Fox filed a petition to the supreme court after an appeals court rejected their call for a ban on the service.



They argued that the service was making a “public performance” of their shows – something that would be covered by copyright law – and that Aereo was effectively stealing their shows. Cable companies pay huge fees to broadcasters whereas Aereo has so far paid nothing.

The ruling was far more definitive than many observers had been expecting. Lobby groups Electronic Frontier Foundation and Public Knowledge had backed Aereo in court, arguing that shutting the service would send a dangerous message to startups and calling the broadcasters’ arguments “bogus”.

In their ruling the supreme court justices argued: “Given the limited nature of this holding, the court does not believe its decision will discourage the emergence or use of different kinds of technologies.”

The argument centered on the interpretation of a federal law that applies to the public performance of copyrighted works. Aereo argued that its antennae meant it was facilitating thousands of individual performances and not a public performance, which would violate the Copyright Act of 1976 which gives the copyright owner the “exclusive right” to “perform the copyrighted work publicly”.

Last April Aereo beat off an attempt to shut it down in a New York court with the judges citing the case of Cablevision, which in 2008 clashed with 20th Century Fox and others over the creation of a cloud-based digital video recorder. One dissenting judge, Denny Chin, called Aereo's technology "a sham". Chin wrote that the company was using a multitude of antennas in order to take advantage of "a perceived loophole in the law".

Objecting to the ruling supreme court, justice Antonin Scalia compared Aereo to a photocopier, and said the company “should not be directly liable whenever its patrons use its equipment to ‘transmit’ copyrighted television programs to their screens”. He said the decision was “built on the shakiest of foundations and would have unintended consequences."

“The court vows that its ruling will not affect cloud-storage providers and cable television systems … but it cannot deliver on that promise given the imprecision of its results-driven rule”

David Wittenstein, partner in law firm Cooley LLP's Technology Transactions, which represents several broadcasters and cable firms, said: “The court has said that what Aereo was doing was the functional equivalent of a cable or a satellite system. The question was could they cleverly [avoid] the obligations of that a cable company is subject to, the answer is no.”

But Wittenstein said the ruling was far from the end the debate over copyright in the digital age and the court had tried, perhaps unsuccessfully, to avoid ruling on copies made by consumers and stored in the cloud. He said he was “certain” that copyright and the cloud would be back before the supreme court in another case in the not too distant future.

