May 30, 2012 / 9:58 PM / 5 years ago

Web TV firm Aereo says injunction would destroy it

* Online TV service sued by ABC, CBS, NBCUniversal, others

* Broadcasters say Aereo infringes copyrights

* Aereo says does not transmit live, denies violation

By Basil Katz

NEW YORK, May 30 (Reuters) - The CEO of Aereo Inc said on Wednesday that the Barry Diller-backed online television venture might collapse if a U.S. judge forces it to stop retransmitting the programming of broadcasters and local TV stations.

A self-described “online television platform,” Aereo enables subscribers to stream live over-the-air broadcasts on their phones, tablet computers and other devices. It was launched on March 12 to New York-area subscribers only and charges $12 per month for its service.

Even before its launch, two groups of broadcasters including News Corp’s Fox, CBS Corp, Univision Communications Inc and others filed separate lawsuits against Aereo for copyright violations and asked Manhattan federal judge Alison Nathan to shut it down.

At a hearing in U.S. District Court in Manhattan on Wednesday, Aereo CEO Chet Kanojia said a preliminary injunction against the service would cripple its ability to keep growing.

“It would be devastating. It would be the end of the company,” Kanojia said, on the first of two days of testimony and oral argument over the injunction.

In February, Aereo announced $20.5 million in Series A financing led by IAC/InterActive Corp. Diller, a colorful self-made media entrepreneur worth $1.6 billion according to Forbes magazine, is chairman of IAC and is on Aereo’s board.

At Wednesday’s hearing, a lawyer for Walt Disney Co’s ABC accused Kanojia of creating a business that unlawfully bypasses the plaintiffs’ exclusive broadcast rights in order to undermine their business.

“What you are doing is disruption of the current economic system on which on the air broadcast is based,” lawyer Bruce Keller said.

“I don’t understand how,” Kanojia replied.

The plaintiff broadcasters say that by retransmitting live TV on the Internet, Aereo is violating the broadcasters’ exclusive right to transmit live shows to the public.

Aereo, however, says its technology does not retransmit live shows at all. Instead it allows subscribers to order a copy of the live show with a slight delay, or they can record it to watch later.

Last week, the judge dismissed the plaintiffs’ claims of unfair competition and is not expected to rule immediately on the preliminary injunction.

The cases are American Broadcasting Cos. et al v. Aereo Inc, U.S. District Court, Southern District of New York, No. 12-01540; and WNET et al v. Aereo Inc in the same court, No. 12-01543.

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