Online broadcast TV service Aereo still in legal limbo as aggressive westward expansion begins

Chet Kanojia (Aereo)

Aereo, the service that lets you stream live broadcast TV over the web and Apple devices, is about to begin an ambitious westward conquest from New York City to 22 new markets. CEO Chet Kanojia announced the expansion and $38 million in fresh funding yesterday at the largest technology convention in the country, CES. The company will also be introducing a big marketing push, an Android app, and some splashy new hires in the spring.

One front where there's little news: Aereo's legal battle. The company was immediately sued by major broadcasters for copyright infringement when it launched in New York City in March. Aereo argues that the service is legal because it's analogous to legally-sanctioned "rabbit ears" that enhance broadcast signals in the home. The company actually builds data centers in order to assign every customer their own remote antenna. Broadcasters object to this practice, calling it a legal runaround and demanding that Aereo pay fees to retransmit the content.

The case is moving slowly

The case is moving slowly, however. The last ruling was in July, when a judge denied the broadcasters' request to force Aereo to stop doing business until the case was settled. The broadcasters have appealed that decision, but it's uncertain when the appeals court will issue a ruling. Meanwhile, the lawsuit is still in the fact-finding phase with no court dates yet assigned.

Kanojia is blissfully ignoring the legal proceedings and focusing on the new expansion, the CEO told The Verge in an interview today. The company is moving into small cities like Madison, Wis. as well as larger metropolitan areas like Chicago. They chose the markets based on "back of the napkin" research on levels of digital penetration and the youthfulness of the population, Kanojia said. Another factor was satellite penetration, which is a good indicator of dissatisfaction with cable service, he said.

The rollout will happen from spring to summer as the data centers get built in the new markets. There is no hard timeline for the launches, Kanojia said. Aereo's total potential reach will be 97 million customers once it arrives in all 22 markets, he said. The company expects to add more markets in the second half of 2013, even venturing into California where the legal environment tends to favor the broadcast industry.

With every new city, the fines Aereo would have to pay if it loses in court go up

With every new city — indeed, with every new customer — the fines Aereo would have to pay if it loses in court go up. The strategy is similar to the one used by Silicon Valley car and cab-ordering service Uber, which attempted to bulldoze over regulators with varying success. But with a personal endorsement from television mogul Barry Diller and a reported $58.5 million in total funding, Aereo has the cash and the cajones to move forward with a business plan that's still in legal limbo.

The Verge
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