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Aereo hits the end of the runway with bankruptcy filing

Aereo has filed Chapter 11 bankruptcy, marking the end of the runway for the start-up that sought to test the definition of ‘broadcast’ — but which ultimately failed to take off.

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Aereo hits the end of the runway with bankruptcy filing

Michelle Clancy

Aereo has filed Chapter 11 bankruptcy, marking the end of the runway for the start-up that sought to test the definition of ‘broadcast’ — but which ultimately failed to take off.

Aereo has been shut down since the end of June when the US Supreme Court found the company in violation of copyright law for retransmitting local TV station feeds over the Internet without paying for the content. Aereo had counter-argued that because it provided dime-sized antennae to its subscribers — who paid $8 per month for access to a couple dozen channels — it should be considered an over-the-air, rabbit ears-based service, which is exempt from retrans fees. It also argued that its content is delivered to a single cloud-based DVR device for one subscriber and can therefore not be categorised as a public broadcast service, subject to fees and regulations.

But after the Supreme Court didn’t buy that argument, it shifted tactics — it applied for cable provider status at the US Copyright Office as a last-ditch effort. Gaining that distinction would allow it to be subject to must-carry regulations: it would be guaranteed access to local feeds, but would be subject to retransmission fees.

But, the office said that it won't process the application for a compulsory license, at least for now. The office’s position has had a significant effect on court attitudes too, with the Second Circuit Court of Appeals denying it a court hearing in the matter.

Taken together, the challenges in going forward “have proven too difficult to overcome,” the company's founder and CEO Chet Kanojia said in a statement. So, the company is cutting its losses.

He added, “Chapter 11 will permit Aereo to maximise the value of its business and assets without the extensive cost and distraction of defending drawn out litigation in several courts.”

"The US Supreme Court decision effectively changed the laws that had governed Aereo's technology, creating regulatory and legal uncertainty," Kanojia said. "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."

Aereo operated in 11 US markets before it shut down.

It’s obviously been a long and winding road so far—and it seems to have ended for Aereo. But, the FCC said last month that it is considering reclassifying OTT operators to put them on parity with cable MSOs and satellite companies. According to reports, the commission is considering extending its program access rules to online providers that provide linear video streams, and allow them to negotiate retransmission deals with broadcasters.

An FCC spokesperson told Multichannel News that the idea is to create a technology-neutral definition of an MVPD, thus eliminating the requirement of having facilities-based transmission path in order to be guaranteed access to TV stations via must-carry rules and retransmission.

The move would clearly have far-ranging implications, allowing the next Aereo to perhaps take its fight further.