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The dream is dead: Aereo files for chapter 11 bankrupty

Aereo could never recover from losing its case against the United States Supreme Court this summer

Financial trends and news by Steven Loeb
November 21, 2014 | Comments
Short URL: http://vator.tv/n/3a8d

Perhaps it was inevitable, but the news is still sad: after years of legal battles and a case that went all the way to the United States Supreme Court, the end has finally arrived for TV-streaming service Aereo.

The company has filed for chapter 11 bankruptcy, it was announced in a blog post from founder and CEO Chet Kanojia on Friday.  The deathblow, he said, came from the decision by the Supreme Court in June, which said that the service violated the copyright of the broadcast networks, and was therefore illegal.

"The U.S. Supreme Court decision effectively changed the laws that had governed Aereo’s technology, creating regulatory and legal uncertainty. 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," Kanojia wrote. 

Founded in 2011, Aereo was a Web platform that allows users to watch live TV on their mobile devices or computers. It grabbed over-the-air TV signals, using tiny antennas, and routed them to users over the Internet, so that customers could watch broadcast TV whenever, and wherever, they want.

The problem is that Aereo ran into was over retransmission fees, which requite cable operators, and other distributors, to obtain permission from broadcasters before carrying their programming. Operators will often be asked to pay to carry the station. 

The company tried to argue in front of the Supreme Court that its service differed from cable companies in one key way: while cable companies are constantly streaming, Aereo remains "inert" until the user decides to use it. It maintained that what goes out over the air should belong to the people. 

The Court said that it did not see enough of a difference between Aereo and a traditional cable company to justify Aereo's use of copyrighted material. Aereo tried to use that ruling to its advantage, asking the to be reclassified as a cable company, but was turned down by the Copyright Office.

Since then, all has been quiet on Aereo's front, until news broke last week that the company was shutting down operations in Boston and laying of staff in that office and in New York. 

Aereo had raised a total of $97 million, from investors that included IAC, Highland Capital Partners, FirstMark Capital, First Round Capital and High Line Venture Partners. Once again, it proves that raising a lot of money does not guarantee any kind of success. Especially when you have the big broadcast networks and the United States Supreme Court against you. 

"We have traveled a long and challenging road. We stayed true to our mission and we believe that we have played a significant part in pushing the conversation forward, helping force positive change in the industry for consumers," wrote Kanojia.

"We feel incredibly lucky to have had the opportunity to build something as meaningful and special as Aereo. With so many shifts and advances in technology, there has never been a more perfect time to take risks, challenge the status quo and build something special."

(Image source: zdnet.com)


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