Barry Diller’s online video streaming service Aereo won’t be shut down by broadcasters, a federal judge ruled on Wednesday.

Separately, Viacom on Wednesday cut off access to some key online videos, such as Comedy Central’s “The Daily Show with Jon Stewart,” to all U.S. consumers in what observers say may be a strong-arm tactic in an escalating battle with DirectTV over fees to carry Viacom’s content.

The two actions were significant markers in an increasingly contentious industry battle over fees and new technological dominance as television entertainment and news move to the Internet.

U.S. District Judge Alison Nathan on Wednesday rejected a request by Fox, PBS, Tribune, Gannett and New York-based WNET to stop Aereo’s operations. The broadcasters said they will appeal the decision. They have accused Aereo of “misappropriating copyrighted material” by using antennas to essentially pick up broadcasters’ signals and then stream their channels online for a subscription fee.

They said Aereo, funded by IAC/InterActiveCorp CEO Diller, was stealing its broadcast signals in New York without paying them.

“While we are disappointed, we will continue to fight to protect our copyrights and expect to prevail on appeal,” the broadcasters said in a statement.

The court decision may embolden other startups to follow Aereo’s lead, some analysts have said.

Consumer advocates hailed the decision as a move forward for competition in the online video space, where consumers are increasingly demanding more live streaming of sports and other shows that they can’t get without network signals or cable subscriptions.

“This isn’t just a win for Aereo, it’s also a significant win for consumers who are demanding more choice and flexibility in the way they watch television,” said Aereo CEO and founder Chet Kanojia. “We said from the start that we believed that a full and fair airing of the issues would reveal that Aereo’s groundbreaking technology falls squarely within the law.”

Battles in the television industry have also grown heated in recent years over licensing fees that cable and satellite firms pay networks such as Viacom and Fox for their popular shows.

About 20 million DirectTV subscribers were shut out of popular Viacom channels MTV, Nickelodeon and Comedy Central late Tuesday, as the companies failed to reach an agreement over carriage fees.

On Wednesday afternoon, Viacom decided to limit U.S. access to some online videos, in a move that DirectTV called a strong-arm tactic in the battle between the two firms.

“Once again it’s viewers who suffer when media companies stall in their negotiations. But the scale of Viacom’s overreaction is unprecedented,” said John Bergmayer, a senior staff attorney for public interest group Public Knowledge.

“Viacom has decided to take a service away from all Internet users in its attempt to punish DirecTV,” Bergmayer said. “It is apparent that Viacom puts little stock in the Internet and the online future of video if it is willing to use all Internet users as a pawn in its negotiations.”


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