Closely watched Internet TV startup Aereo raises $38 mln

Wed Jan 9, 2013 2:45am IST

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* Web TV service expands to 22 cities

* Company awaits court decision on broadcaster fight

By Liana B. Baker

Jan 8 (Reuters) - Aereo, the Internet TV startup backed by the media company run by billionaire Barry Diller, has raised $38 million and will expand to 22 U.S. cities including Chicago, Houston and Miami.

Diller is chairman of IAC, which led the latest investment round along with Highland Capital Partners. This is its biggest funding round to date. It previously raised $20.5 million last February in a round led by IAC.

Aereo was launched last March to New York-area subscribers for $12 per month. It lets subscribers stream live broadcasts of TV channels on phones, tablet computers and other devices using individual antennas. Users can watch the major broadcast networks such as CBS, NBC, FOX, ABC, the CW, PBS, Telemundo and other channels.

The TV industry sees the service as a threat to its ability to control subscription fees and generate advertising income, its two main sources of revenue.

Aereo said on Tuesday in a statement that the 22-city expansion is the first phase of its national expansion. Philadelphia, Washington, Denver, Minneapolis, Pittsburgh, Tampa and Cleveland are among some of the new cities Aereo will reach.

Aereo has not disclosed revenue or user numbers.

Before Aereo's launch, broadcasters including Walt Disney Co's ABC, CBS Corp, Comcast Corp's NBCUniversal and News Corp's Fox filed lawsuits accusing it of copyright violations.

In November, broadcasters challenged an earlier decision by a U.S. district court that rejected their request for a preliminary ban against Aereo. Aereo is waiting for a decision in that case, a spokeswoman said in an email.

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