Aereo, the Internet TV startup that lets people stream broadcast television and record it to a virtual DVR, doesn’t have a backup plan if it loses its lawsuit from broadcasters like Fox and CBS that want its business model declared illegal.
On April 22, the company is going to have a chance to argue its case to the Supreme Court.
In an interview with Bloomberg TV earlier this week, Aereo CEO Chet Kanojia responded to questions about the company’s plans if it loses the case with a shockingly honest answer:
“No. There is no plan. We believe in our merit and we do think it’s the right thing. Progress is important. The mission of this company was to try to create an open platform, to try to wedge the system open a little bit. And if we don’t succeed in that despite our best efforts, good law on our side, and the merits of our case, it will be a tragedy but it is what it is.”
So why doesn’t the company have a “Plan B?” Because, from its perspective, it isn’t offering a completely new product, just a new way of doing something that’s been legal for three decades now.
After all, how different is it — in terms of what the consumer is actually doing — to record live, broadcast TV to the cloud instead of recording to a DVR attached to a television set? Or, if you want to go back farther, a VCR?
Aereo doesn’t even let you watch TV you record outside of the market in which you’re a customer. A New York-based Aereo user can’t stream shows she’s saved to Aereo while visiting San Francisco. Yet you could easily ship VCR tapes or a hard drive full of recorded television to a friend across the country. If anything, Aereo’s method is better at making sure content is only seen by those the broadcasters wanted to reach.
In a statement released yesterday, Kanojia emphasised that what his startup is doing isn’t a new concept:
“We have every confidence that the Court will validate and preserve a consumer’s right to access local over-the-air television using an individual antenna, make a personal recording with a DVR, and watch that recording on a device of their choice.
“The broadcasters are asking the Court to deny consumers the ability to use the cloud to access a more modern-day television antenna and DVR. They are asking the Court to confine consumers to outdated equipment and limit their access to lawful technology in order to protect a legacy business model, the success of which is built on eliminating consumer choice and competition in the marketplace. Broadcasters should not be able to use the Courts or misuse the Copyright Act to drive forward what they believe are their most lucrative business models, at the expense of consumers.”
The stakes couldn’t be higher for the two-year-old company. It wouldn’t be such a big deal if Aereo were in this situation as a brand-new startup or wasn’t running off of capital brought in from outside investors.
But Aereo has raised $US97 million in venture capital so far — $US34 million of which was raised in January after the company had already been sued by major U.S. television broadcasters.
Aereo’s investors clearly think that the startup has a decent chance at winning its court battle. Still, there can be no telling how judges will decide before arguments have actually been made, so it’s surpising to see the company’s CEO state that the company’s entire fate “is what it is.”