Embattled OTA-over-OTT provider Aereo filed for Chapter 11 reorganization Friday in the Southern District of New York, citing an "uncertain regulatory and legal climate" that has kept the startup from operating since June.
"Even with significant victories in the federal district courts in New York and Boston and the Second Circuit Court of Appeals, the reversal of the Second Circuit decision in June by the U.S. Supreme Court has proven difficult to overcome," said Chet Kanojia, Aereo CEO and founder, in a post announcing the bankruptcy filing on the company's website.
Kanojia called the Chapter 11 filing "the next logical step." The provider has seen significant amounts of money go out the door as it fought a series of legal battles to establish the legitimacy of its service--which rented dime-sized antennas and cloud DVRs to subscribers who could then receive local broadcast stations' over-the-air signals through their Internet connections.
Aereo paused operations after the Supreme Court decision in June, which skirted deliberation around the technology the company was using and instead determined that Aereo was violating copyright laws by retransmitting broadcasters' signals without compensating them.
Following the decision, Aereo attempted to convince a lower court that the high court's decision around retransmission effectively defined their service as an MVPD (multichannel video programming distributor), requiring broadcasters to negotiate retransmission fees with the service. The District Court of Southern New York disagreed, and formally restricted Aereo from streaming live signals over the Internet in late October.
Aereo soon afterward closed its Boston office and laid off employees there and in New York.
"Chapter 11 will permit Aereo to maximize the value of its business and assets without the extensive cost and distraction of defending drawn out litigation in several courts," Kanojia said.
This is likely the end of the road for Aereo--while Chapter 11 will provide protection for the company, investor money has dried up as its legal options ran out.
Still, Aereo's run precipitated some major changes for the online video industry. Spurred by the Supreme Court decision and by a continuing shift toward over-the-top video services, the FCC is proposing to change the definition of an MVPD to take into account OTT delivery. It's unlikely that this would have happened so quickly if Aereo hadn't challenged the current broadcast model.
And while broadcasters and their representing body, the NAB, have boiled down their anti-Aereo message to a simple statement--Aereo violated copyright, and that is that--the service was a thorn in their side for months and worried the industry so much that major networks like CBS are throwing away caution and jumping into OTT streaming. It's a move that's more preemptive than profitable right now, with online video advertising still in its early days.
"We have traveled a long and challenging road," Kanojia said. "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."
For more:
- see the release
- the Washington Post has this story
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