The Supreme Court agreed Friday to decide a high-stakes dispute between the nation’s broadcast networks and an upstart Web company that is providing live television programming over the Internet.
Both the networks and Barry Diller-backed Aereo asked the justices to settle the legal fight that could radically change the way live television is delivered to American consumers and disrupt an economic model that accounts for billions of dollars in fees for the broadcasters.
The case is one of eight the Supreme Court accepted Friday, all of which will probably be argued in April. One of those cases involves an Ohio law that criminalizes disseminating false information about a political candidate during a campaign.
In the Aereo case, the networks contend that Aereo violates a part of the copyright law that requires network permission for the right to transmit to the public “public performances” of their work. The networks receive more than $4 billion in annual fees from satellite and cable companies for the rebroadcasting rights.
But Aereo uses a multitude of small antennas to capture live over-the-air television signals and directs them to subscribers, where the content can be watched on computers or other devices.
Because individual antennas are dedicated to individual subscribers, the firm says it is not transmitting the program to the public, but only allowing the individual to capture what is available free over the airwaves. A panel of the U.S. Court of Appeals for the 2nd Circuit agreed with Aereo.
That decision “is threatening the very fundamentals of broadcast television,” the broadcasters argued in their appeal. They said the ruling blesses a business model based on the “massive, for-profit exploitation of the copyrighted works of others.”
ABC, NBC, CBS, Fox and PBS, among others, are all parties to the suit. Local broadcasters, the National Football League and Major League Baseball support the networks.
Aereo agreed that the high court should hear the case because it said its plans for future expansion would be hampered by lingering legal questions.
Founder and chief executive Chet Kanojia said the company’s technology is “functionally equivalent to a home antenna and DVR.”
After the court accepted the case, the company said in a statement: “We have every confidence that the court will validate and preserve a consumer’s right to access local over-the-air television with an individual antenna, make a personal recording with a DVR, and watch that recording on a device of their choice.”
Aereo is available in 10 cities, including New York and Baltimore, and its Web site says it is looking to expand to Washington. Memberships start at $8 a month.
Faced with cable bills that typically reach well over $100 a month, 5 million households have abandoned cable, up from 2 million in 2007, in favor of much cheaper Web-based options, according to Nielsen.
Under the traditional model of television, broadcasters — which have long financed the creation of shows and padded the profits of cable companies that distribute programs — have held themselves out as the only source for local news and live sports.
Justice Samuel A. Alito Jr. recused himself from the case. As is traditional, he did not give a reason, but normally justices recuse when they have a financial interest in one of the parties in a suit.
The case is American Broadcasting Companies v. Aereo.
The case involving prohibitions on making knowingly false charges against a political candidate would provide a vehicle for the court to decide whether such laws are unconstitutional. About a third of the states have these laws.
An anti-abortion group, the Susan B. Anthony List, said the laws cannot survive the court’s decision two years ago in U.S. v. Alvarez that even lying about winning military honors was protected speech under the First Amendment.
False statement laws, the group’s petition says, do exactly what the court warned against: “inserting state bureaucrats and judges into political debates and charging them with separating truth from oft-alleged campaign ‘lies.’
“Such statutes are almost certainly unconstitutional, yet they play a troubling, harassing role in every political campaign in those states.”
The dispute in the political speech case arises from the campaign of former congressman Steve Driehaus (D-Ohio) for reelection in 2010 and his vote in favor of the Affordable Care Act. The Susan B. Anthony List wanted to erect a billboard stating: “Shame on Steve Driehaus! Driehaus voted FOR taxpayer-funded abortion.”
Driehaus filed a complaint with the Ohio Elections Commission, saying such a claim would violate state law making it a crime to “post, publish, circulate, distribute, or otherwise disseminate a false statement concerning a candidate, either knowing the same to be false or with reckless disregard for whether it was false or not, if the statement is designed to promote the election, nomination, or defeat of the candidate.”
Driehaus contended that the group’s statement was false because the health-care law required that abortion be paid for by a separate account funded solely by enrollees, even though insurers of low-income families would be subsidized with federal dollars.
The anti-abortion group, according to its petition to the court, contended that was a “mere accounting gimmick.”
Because of Driehaus’s complaints, the advertising company did not put up the billboard.
The group wanted to challenge the law as unconstitutional. But a federal judge and then the U.S. Court of Appeals for the 6th Circuit said the suit could not go forward because the group had not been harmed.
The Supreme Court could rule, without reaching the question of whether the laws are unconstitutional, that the lower courts were either correct, or must entertain the challenge.
The case is Susan B. Anthony List v. Driehaus.