Kevin Qiao is a J.D. Candidate, 2021 at NYU School of Law.
Providing a major win to America’s major broadcast networks, the Supreme Court’s 6-3 decision in American Broadcast Cos. v. Aereo, Inc. held that Aereo, through its operations as a live TV streaming service provider, had infringed the copyrights of NBC, ABC, CBS and Fox.
Aereo had set up a system for pulling from the airwaves various networks’ live TV broadcasts, as well as a process by which it converted and retransmitted such content in the form of “live streaming” videos. The company granted its paying subscribers the ability to watch and record live television through their internet-enabled devices. The major networks alleged that, by operating its service while failing to pay retransmission licensing fees, Aereo violated each network’s 17 U.S.C. § 106 public performance right. The networks contended that Aereo was unlawfully skirting the retransmission licensing fees that were required of traditional cable and satellite television companies, despite Congress’s having previously amended the Copyright Act to clarify its applicability to such companies.
In reaching its decision in favor of the major broadcast networks, effectively ending Aereo’s business, the Court relied heavily on the apparent similarities between Aereo’s streaming platform and traditional cable television broadcasting. Specifically, the Court emphasized that both were in the business of transmitting full videos, along with accompanying audio content, to a large number of unrelated subscribers.
Four years later, Locast took center stage as a sort of spiritual successor to Aereo, with one key distinction: Locast is organized as a non-profit, and it provides its services completely free of charge. Part of what initially motivated Locast’s founder, David Goodfriend, to set up the company was his desire to test the limits of 17 U.S.C. § 111, which carves out exemptions from retransmission licensing fee payment requirements, immunizing “a governmental body, or other nonprofit organization,” as long as its retransmissions are “without any purpose of direct or indirect commercial advantage.” In fact, Locast came about as a product of Goodfriend’s academic curiosity more than anything else. While lecturing a class at Georgetown Law, Goodfriend was pontificating on the public interest ramifications of Aereo when he conceived what would become Locast. Notably, Mr. Goodfriend is no stranger to complicated media law matters by any stretch of the imagination. Before founding Locast, he worked as legal counsel to an FCC commissioner from 1999 to 2001, and he also previously served as Vice President of Law and Public Policy at DISH Network, which is the U.S.’s second largest provider of satellite TV.
Another motivation that Goodfriend had in founding Locast was his desire to bring the airways back to the American people. He wondered how many young people were aware that, prior to cable and satellite television, TV was free for everyone. In fact, during the dawn of television, the arrangement reached between the major broadcasters and the U.S. government involved the former’s provision of free programming in exchange for use of the airwaves. While many today still receive free local channels through traditional antenna broadcasting, most who consume live television do so through either a satellite or cable TV service. Cable and satellite companies acquire access to the local channels after paying licensing fees to the major broadcast networks. Generating billions of dollars in revenue, the rates at which their licensing fees are set are negotiated roughly every three years. As one might expect, these negotiations can become quite vicious and occasionally end with no agreement. And what happens when these fee disputes stalemate? Television blackouts that leave viewers without access to live programming. As a case in point, as recently as July 20 of this year, AT&T (which owns DirecTV) and a CBS affiliate were locked in a fee dispute that resulted in a CBS blackout for nearly 6.5 million AT&T customers. In the face of such blackouts, without an alternative like Locast, viewers would have no way of accessing the effected TV content as it is airing.
It only took about a year from its launch for Locast to catch the attention of the major broadcast networks, which filed suit in July, 2019, alleging that Locast is essentially Aereo 2.0 and should be subject to the same retransmission licensing fees as the cable and satellite TV companies. If read in a strictly literal vein, the fee exemption statute suggests that Locast’s operations are lawful and exempt from licensing fee requirements given Locast’s non-profit status, and the major broadcast networks run the risk of inadvertently generating publicity for Locast on account of the “Streisand effect” that high-profile litigation can produce. Nonetheless, Jessica Litman, a copyright professor at University of Michigan, believes the major broadcasters’ chance of prevailing is around fifty percent, simply because they have deeper pockets to sustain drawn-out litigation. Meanwhile, framing itself as “the Robin Hood of TV,” Locast has begun to reach out to its supporters for donations to help the company fight off the legal claims that “big media” has lodged against it. The cumulative inference is that the ongoing legal dispute may endure well into the future.
While the goals of Locast’s founder appear virtuous, the non-profit’s fight might evolve into somewhat of a proxy war between the cable and satellite TV providers against the major broadcast networks. AT&T has already donated roughly $500,000 to Locast’s legal fight. Explaining its involvement, the company stated that it simply supports innovative means to access free over-the-air content and, more generally, technology that gives consumers more choice and access to local media. Even before the monetary assistance, AT&T had already associated itself with Locast: during the CBS blackout, AT&T customer service representative directed their disgruntled customers to Locast to view live television in the interim.
Theoretically, if Locast’s services become more predominant, free live-streaming programs will likely become more accessible to the public, especially as viewing behaviors continue to shift from traditional antenna-based television to internet-based streaming services. Broadening Locast’s presence might decrease consumer demand for cable companies to carry the major broadcasters’ channels given the free alternative means to view live content that Locast now offers. Such a change in market dynamics would diminish the leverage that major broadcasters have during their retransmission license negotiations with the cable and satellite TV providers. Though AT&T’s involvement might, to some extent, tarnish the “Robin Hood” aesthetic Locast is pushing, Locast’s ultimate mission of bringing the airwaves back to the public at no cost to consumers is fundamentally disruptive, and it warrants the attention of copyright law practitioners as well as the entertainment industry at large. And if you’re a cord cutter who happens to live in one of the cities that Locast operates in, and you’re desperately searching for a way to watch that NFL game or live awards ceremony, just know that there’s a free service out there that might meet your needs.