The Fight for Broadcast TV

Kevin Qiao is a J.D. Candidate, 2021 at NYU School of Law.

Providing
a major win to America’s major broadcast networks, the Supreme Court’s 6-3
decision in American Broadcast
Cos. v. Aereo, Inc. held that Aereo, through its operations as a live TV
streaming service provider, had infringed the copyrights of NBC, ABC, CBS and
Fox.

Aereo
had set up a system for pulling from the airwaves various networks’ live TV
broadcasts, as well as a process by which it converted and retransmitted such
content in the form of “live streaming” videos. The company granted its paying
subscribers the ability to watch and record live television through their internet-enabled
devices. The major networks alleged that, by operating its service while
failing to pay retransmission licensing fees, Aereo violated each network’s 17 U.S.C. § 106 public
performance right. The networks contended that Aereo was unlawfully skirting the
retransmission licensing fees that were required of traditional cable and
satellite television companies, despite Congress’s having previously amended the
Copyright Act to clarify its applicability to such companies.

In
reaching its decision in favor of the major broadcast networks, effectively
ending Aereo’s business, the Court relied heavily on the apparent similarities
between Aereo’s streaming platform and traditional cable television
broadcasting. Specifically, the Court emphasized that both were in the business
of transmitting full videos, along with accompanying audio content, to a large
number of unrelated subscribers.

Four
years later, Locast took center stage as a sort of spiritual successor to Aereo,
with one key distinction: Locast is organized as a non-profit, and it provides
its services completely free of charge. Part of what initially motivated Locast’s
founder, David Goodfriend, to set up the company was his desire to test the
limits of 17 U.S.C. § 111, which carves out
exemptions from retransmission licensing fee payment requirements, immunizing “a
governmental body, or other nonprofit organization,” as long as its retransmissions
are “without any purpose of direct or indirect commercial advantage.” In fact,
Locast came about as a product of Goodfriend’s academic curiosity more than
anything else. While lecturing a class at Georgetown Law, Goodfriend was pontificating
on the public interest ramifications of Aereo
when he conceived what would become Locast. Notably, Mr. Goodfriend is no
stranger to complicated media law matters by any stretch of the imagination. Before
founding Locast, he worked as legal counsel to an FCC commissioner from 1999 to
2001, and he also previously served as Vice President of Law and Public Policy
at DISH Network, which is the U.S.’s second largest provider of satellite TV.

Another
motivation that Goodfriend had in founding Locast was his desire to bring the
airways back to the American people. He wondered how many young people were
aware that, prior to cable and satellite television, TV was free for everyone.
In fact, during the dawn of television, the arrangement reached between the
major broadcasters and the U.S. government involved the former’s provision of
free programming in exchange for use of the airwaves. While many today still
receive free local channels through traditional antenna broadcasting, most who consume
live television do so through either a satellite or cable TV service. Cable and
satellite companies acquire access to the local channels after paying licensing
fees to the major broadcast networks. Generating billions of dollars in
revenue, the rates at which their licensing fees are set are negotiated roughly
every three years. As one might expect, these negotiations can become quite
vicious and occasionally end with no agreement. And what happens when these fee
disputes stalemate? Television blackouts that leave viewers without access to
live programming. As a case in point, as recently as July 20 of this year,
AT&T (which owns DirecTV) and a CBS affiliate were locked in a fee dispute
that resulted in a CBS blackout for nearly 6.5 million AT&T customers. In
the face of such blackouts, without an alternative like Locast, viewers would
have no way of accessing the effected TV content as it is airing.

It
only took about a year from its launch for Locast to catch the attention of the
major broadcast networks, which filed suit in July, 2019, alleging that Locast is
essentially Aereo 2.0 and should be subject to the same retransmission
licensing fees as the cable and satellite TV companies. If read in a strictly
literal vein, the fee exemption statute suggests that Locast’s operations are
lawful and exempt from licensing fee requirements given Locast’s non-profit
status, and the major broadcast networks run the risk of inadvertently
generating publicity for Locast on account of the “Streisand effect” that high-profile
litigation can produce. Nonetheless, Jessica Litman, a copyright professor at
University of Michigan, believes the major broadcasters’ chance of prevailing
is around fifty percent, simply because they have deeper pockets to sustain
drawn-out litigation. Meanwhile, framing itself as “the Robin Hood of TV,” Locast
has begun to reach out to its supporters for donations to help the company fight
off the legal claims that “big media” has lodged against it. The cumulative
inference is that the ongoing legal dispute may endure well into the future.

While
the goals of Locast’s founder appear virtuous, the non-profit’s fight might evolve
into somewhat of a proxy war between the cable and satellite TV providers against
the major broadcast networks. AT&T has already donated roughly $500,000 to
Locast’s legal fight. Explaining its involvement, the company stated that it simply
supports innovative means to access free over-the-air content and, more
generally, technology that gives consumers more choice and access to local media.
Even before the monetary assistance, AT&T had already associated itself
with Locast: during the CBS blackout, AT&T customer service representative directed
their disgruntled customers to Locast to view live television in the interim.

Theoretically,
if Locast’s services become more predominant, free live-streaming programs will
likely become more accessible to the public, especially as viewing behaviors
continue to shift from traditional antenna-based television to internet-based
streaming services. Broadening Locast’s presence might decrease consumer demand
for cable companies to carry the major broadcasters’ channels given the free alternative
means to view live content that Locast now offers. Such a change in market
dynamics would diminish the leverage that major broadcasters have during their retransmission
license negotiations with the cable and satellite TV providers. Though
AT&T’s involvement might, to some extent, tarnish the “Robin Hood”
aesthetic Locast is pushing, Locast’s ultimate mission of bringing the airwaves
back to the public at no cost to consumers is fundamentally disruptive, and it warrants
the attention of copyright law practitioners as well as the entertainment industry
at large. And if you’re a cord cutter who happens to live in one of the cities
that Locast operates in, and you’re desperately searching for a way to watch
that NFL game or live awards ceremony, just know that there’s a free service
out there that might meet your needs.