Locast, a free streaming service for local broadcast television, is trying to expand its footprint while facing a legal challenge from the top broadcasters in the U.S.
The service, which last week launched in the Tampa Bay area, is now in 19 U.S. markets including major cities like New York City, Los Angeles, Chicago and Philadelphia along with much smaller markets like Sioux Falls and Rapid City in South Dakota. David Goodfriend, founder and chairman of Locast, said the service has attracted more than 1.3 million signups, though usage varies a lot and the vast majority of users don’t pay to use it.
Locast is a non-profit service that relies on a statute within the Copyright Act to retransmit local broadcast signals. The company asks its users to contribute $5 per month – once they do, they’ll stop seeing donation requests every 15 minutes while they’re using the service. Goodfriend said that Locast now brings in enough monthly contributions to cover its expenses like broadcast tower leases and the cost of paying software developers. The organization can even pay down some of its debt – Goodfriend took out a loan from an entrepreneur to help get Locast up and running.
“For now I feel we’re growing at an organic rate that’s driven largely by user interest,” said Goodfriend. “If people are more interested, they sign up, and the more people who sign up, the more donors there are.”
Locast is hoping to maintain its current pace for launching new markets. The company may take out another loan to finance more growth in major markets and Goodfriend said that when smaller communities make donations big enough to cover equipment costs, which is what happened in South Dakota and Puerto Rico, then Locast will launch in those markets.
With a plan in place to keep spreading its streaming service in the U.S., Locast still needs to fend off a legal fight from ABC, CBS, Fox and NBC. They’ve accused the service of operating with its own commercial benefit in mind. Locast filed a countersuit against the broadcasters and accused them of colluding against it. That drew a forceful response from Gerson Zweifach of Williams & Connolly, the law firm that’s representing the plaintiffs in the Locast case.
“Sixteen million households receive broadcast television free over the air, which represents a nearly 50 percent increase in the last eight years. Locast does nothing for those households; it serves the interests of its pay-TV patrons, who have provided Locast and its founder with hundreds of thousands of dollars in lobbying fees, donations and nationwide distribution on certain pay-TV platforms. We trust the courts to see right through this façade and recognize Locast for what it is – not a public service organization, but a creature of certain pay-TV interests with an entirely commercial agenda.”
Indeed, Locast has received some support from pay TV operators. Last year Locast received a $500,000 donation from AT&T, which said the money was intended to assist Locast in its “mission to make free broadcast content available to consumers and offer them more choice.”
The seemingly cozy relationship operators like DirecTV and Dish Network – where Goodfriend previously served as VP of law and public policy – will likely be central to the broadcasters’ argument against Locast. But Goodfriend said that pay TV operators have mixed feelings about Locast. He said they like that Locast makes broadcast television available so that consumers don’t have to be as dependent on pay TV services to receive those signals. But at the same time, he said they don’t like that Locast potentially eats into their profit margins by drawing away viewers or by helping facilitate more cord cutting.
Goodfriend said that timing around the litigation is up in the air due to the coronavirus pandemic, but he expects that by the end of this year or early next year, the case will go to trial. He said he’s optimistic about that happening, partly because he believes the judge will send it to a jury.
“Let a jury decide. Does this look to you like it’s a scheme designed to make somebody rich? Or does this look to you like it’s a non-profit that’s performing a public service?” said Goodfriend, who insisted that he has made no money from Locast.
Locast will be facing off against some powerful enemies who very much don’t like it. Fox CEO Lachlan Murdoch last year accused Locast of “theft” and called it a “rogue streaming service” that’s violating the copyright laws for commercial gain, “nothing more.”
The National Associated of Broadcasters said Locast is “thinly disguised as a not-for-profit entity,” but it has more in common with predecessors like Aereo, a broadcast television streaming service that was shut down in 2014 by the Supreme Court, which found that it had infringed upon copyright laws.
"We’re confident the courts will see through the AT&T/DISH/Locast ruse and uphold the integrity of U.S. copyright laws that sustain the economic viability of local broadcasting,” said NAB in a statement issued last year.
Goodfriend seems OK with being despised by some so long as Locast can continue to operate.
“I’d rather be a friend to the consumer and enemy of cable companies and network broadcast conglomerates,” he said.