End of an Internet era. Aereo Concedes Defeat and Files for Bankruptcy

The New York Times discusses…

Aereo stormed onto the media landscape about three years ago with a tiny dime-size antenna and a grand plan not only to change the way people watched television but also to upend the economics of the TV industry.

That plan, which set off one of the largest legal battles in the history of television, essentially died on Friday when the streaming television start-up said that it had filed for bankruptcy protection.

Chet Kanojia, the company’s chief executive, said in a blog post that Aereo’s legal and regulatory challenges ultimately proved too difficult to overcome.

“While our team has focused its energies on exploring every path forward available to us, without that clarity, those challenges have limited our options,” he said.

The case was sent back to lower courts, and Aereo spent the last several months trying to find an approach that would have allowed it to continue operations. Aereo said on Friday that bankruptcy protection would allow it to “maximize the value of its business and assets” without the costs and distractions of litigation.

The company also appointed Lawton Bloom of Argus as chief restructuring officer.

The Chapter 11 restructuring allows the company to put an end to its court battles and salvage what value is left in the business. The company, for instance, could pursue a sale of its cloud-based recording and live streaming technologies.

While Aereo was a small service with only tens of thousands of subscribers, broadcasters worried that cable and satellite companies could create similar technologies and avoid paying retransmission fees, which total almost $5 billion annually, according to SNL Kagan.

Broadcasters argued that Aereo’s business model violated copyright laws and was a high-tech way to steal their programs. Aereo argued that its service was a digital solution for watching free over-the-air broadcasting.

Aereo was founded by a team of engineers, lawyers, marketers and even an Olympic medalist with the goal of providing a new viewing service that “enables choice and freedom.” The company raised a total of $97 million in funding and was backed by Barry Diller’s media and Internet company, IAC/InterActiveCorp.

Customers paid $8 to $12 a month to rent one of Aereo’s antennas, which captured over-the-air television signals. They then could stream and record programs from major broadcasters using their mobile phones, tablets, laptops and Internet-connected televisions.

The start-up long said that there was “no Plan B” if it lost in court, and analysts and legal experts said the company had few options to continue without substantially changing its business model. But after the Supreme Court ruling, Mr. Kanojia promised that the company’s work was not done and said that it would continue to “fight to create innovative technologies.”

Aereo suspended its service in June, three days after the Supreme Court ruling.

Since the summer, some broadcasters have pushed forward with plans that would allow viewers to stream their programs over the web live and on demand. CBS, for instance, announced a subscription streaming service last month.

“We have traveled a long and challenging road,” Mr. Kanojia said Friday. “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.”

Aereo appeared to have a sense of humor about its ultimate demise.

In a Twitter post linking to a statement about the bankruptcy, the company said, “The Next Chapter for Aereo.”

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