A dizzying array of micro-antennas, each connected to a single customer’s Aereo account. Should this model be necessary? Image source: Aereo.
As long as each antenna is matched with a unique customer, most judges have agreed that there’s no “public performance” going on — just some private consumption. But it’s not a unanimous view. In the 2nd Circuit Court of Appeals’ panel review of the broadcaster case against Aereo in New York, the Hon. Judge Chin dissented with the Aereo-friendly verdict. He called Aereo a “sham” and a “Rube Goldberg-like contrivance” that was designed to sidestep copyright laws with fancy technical footwork.
Aereo’s copyright controversy might end up in the Supreme Court, or courts might decide to prefer Judge Chin’s arguments over those of his prevailing peers. Even Barry Diller isn’t sure how it’s going to end, which is why IAC/InterActiveCorp (NASDAQ:IACI) has only made minuscule investments in Aereo so far.
What’s next?
Investing in IAC/InterActiveCorp (NASDAQ:IACI) isn’t likely to end in a big payoff. There’s plenty of legal risk on the table, and IAC/InterActiveCorp (NASDAQ:IACI)’s investment is too small to be a game-changer for this $4.2 billion stock anyhow.
If you’re excited about the rebroadcasting model, you’re probably better off waiting for the court drama to play out. If Aereo’s arguments hold, the company might go public on its own and become a directly investable thing. If they fall apart on further review, you won’t charge headlong down a dead-end street.
And of course, a SCOTUS review might do something even better. Those public broadcast airwaves are there for the consumption, so why should it matter how Joe Consumer is enjoying them? The crucial “public performance” argument is becoming irrelevant in the digital age, and what if the justices do away with that language altogether?
Then it would be a trivial matter to set up Aereo-style services anywhere you like, using one antenna for entire markets. Time Warner Cable Inc (NYSE:TWC) and friends would suddenly have a new crop of local content rivals, forced to compete on price and services rather than resting on laurels of monopoly protection.
Aereo itself might then become irrelevant and non-investable, or perhaps it’d become the leader in a brand-new industry. It’s too early to tell, and we don’t even have that sensible SCOTUS decision yet.
That’s one more reason to sit tight and watch the Aereo saga closely. Adding IAC to your Foolwish watchlist will help you monitor the evolving legal situation.
The article Free Cable a Reality With Aereo? Here Are the Facts. originally appeared on Fool.com is written by Anders Bylund.
Fool contributor Anders Bylund has no position in any stocks mentioned. Check out Anders’ bio and holdings or follow him on Twitter and Google+.The Motley Fool recommends and owns shares of Apple.
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