Aereo auctions off tech, but nets a mere $2 million

The company's patents and portfolio are bought by TiVo and RPX Corp.

Financial trends and news by Steven Loeb
February 27, 2015
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Poor Aereo. The end is finally here, but no before the company suffered one final indignity.

The company, which declared bankruptcy in November, received permission from a bankruptcy judge to auction off its technology, after it struck a deal with broadcasters over the sale process. It expected to net at least $4 million, or maybe as much $31.2 million.

How much did it get? A measly $2 million, according to a report from Bloomberg. That is half of the low end of what it wanted.

The two big winners were digital recording company TiVo and  RPX Corp., a patent risk-management company. TiVo got Aereo's trademark, customer list and certain other assets, while RPX Corp. won Aereo’s patent portfolio.

Information-technology consultant Alliance Technologies acquired some of Aereo's equipment. The company also has some assets that weren’t put up for auction that it is seeking to sell. 

That $2 million is a far cry from the $97 million Aereo had raised in venture capital from investors that included IAC, Highland Capital Partners, FirstMark Capital, First Round Capital and High Line Venture Partners.

“We are very disappointed with the results of the auction. This has been a very difficult sales process and the results reflect that,” Aereo attorney William Baldiga said in a statement to various news outlets.

So how did a company that was riding so high fall so far? Thank the Supreme Court of the United States.

Founded in 2011, Aereo was a Web platform that allowed 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 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.

Without a way to turn, the company closed it's offices, laid off staff and filed for chapter 11 bankruptcy.

This seems like the end of the line for Aereo, and there have already been reports that founder Chet Kanojia has already begun moving on to other things. 

VatorNews has reached out for confirmation and comment from Aereo. We will update this story if we learn more. 

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