Two days after a district court issued a summary judgment dismissing much of its argument against a copyright-infringement lawsuit, the local-TV streaming service Locast first said it would stop asking for donations from viewers, and then it announced an immediate shutdown.
“As a non-profit, Locast was designed from the very beginning to operate in accordance with the strict letter of the law, but in response to the court’s recent rulings, with which we respectfully disagree, we are hereby suspending operations, effective immediately,” read an email sent from the service to registered users Thursday morning.
Tuesday’s ruling from Judge Louis Stanton at the U.S. District Court for the Southern District of New York granted summary judgment to a group of broadcasters led by ABC, CBS, NBC and Fox. They had sued Locast in 2019, alleging that the service that New York non-profit launched in January 2018 amounted to a for-profit enterprise.
As the broadcasters’ complaint read: “Locast’s founding, funding, and operations reveal its decidedly commercial purposes.”
Stanton found that logic sufficiently convincing.
“Based on the undisputed facts, it is clear that the Locast service is not offered without charges other than those ‘necessary to defray the actual and reasonable costs of maintaining and operating’ its service,” he wrote.
That “actual and reasonable” line comes from the clause in the Copyright Act of 1976 that Locast had relied upon. It exempts non-profits providing secondary transmissions of local broadcasts “without any purpose of direct or indirect commercial advantage, and without charge to the recipients of the secondary transmission other than assessments necessary to defray the actual and reasonable costs of maintaining and operating the secondary transmission service.”
Stanton noted that Locast’s $4.372 million in revenue from viewer donations in 2020 far exceeded its $2.436 million in total costs that year. He wrote that Locast plowing that surplus into expanding the service’s reach — Thursday morning, its homepage still touted coverage for 55% of the U.S. population — fell outside that clause.
“Nothing in Section 111 specifies that an expansion of the number of infringing transmissions is exempt from that law, and it is not for a court to infer that Congress really meant to allow them,” Stanton wrote.
Locast’s initial response was to stop asking for money, allowing any of its 2.8 million or so registered users to watch for as long as they wanted instead of getting booted back to its channel guide every 15 minutes. The service continued to use various geolocation techniques to restrict access to station streams to local viewers who could watch in a web browser as well as in apps for iOS, Android, Roku, Fire TV, TiVo and Apple TV, among other platforms.
One copyright-law expert suggested before Locast’s shutdown announcement that this move would probably not win over the court.
“It's hard to say whether removing the funding solicitations will assuage the court because it was reading more restrictions into the statute than were actually there,” emailed Catherine Gellis, a Bay Area lawyer with a focus on digital-copyright issues. “So now the service won't ask, at least not as persuasively as it had been, but it's questionable whether that will make the court happy since the court seemed to have been looking for a reason to find the service outside the statute.”
In a second email after the shutdown announcement, Gellis noted that she had just been charged for her latest $5 monthly donation to Locast. Her reaction: “*sigh*.”
While broadcasters may approve of the ruling, video distributors might have reason to regret it whenever they get into the next retransmission fight.
"Locast was a useful tool for MVPDs in their negotiations, allowing them to provide subscribers with a short term alternative during content blackouts," emailed Brett Sappington, a vice president with Interpret. "Locast ultimately erodes the value of full pay-TV packages, but was an interesting option for cord cutters and vMVPD services like Sling TV that do not have local channels."
He added that viewers who never had satisfactory over-the-air reception of Locast, meanwhile, already have cause for regret: "The fact that Locast achieved the use that it did speaks to a lingering need among consumers who want better quality access to the channels in their area that they should be able to receive for free over the air."