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Aereo: Oh Wait, We’re a Cable System After All

Remember when we said we weren't a cable system? Scratch that, Aereo tells court.

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Video startup Aereo spent years arguing it shouldn’t have to pay local TV broadcasters for the right to stream their channels online like cable operators. One failed Supreme Court challenge later, Aereo has had a change of heart.

The video streaming company told a U.S. district court in New York Wednesday it now thinks it’s entitled to be licensed as a cable system because of the Supreme Court’s decision. That would allow the company to stay alive although it would have to pay licensing fees in addition to costs to restart its stalled business.

Aereo allowed consumers to watch local TV channels over the Internet for a monthly fee of up to $12 until shutting down its service a few weeks ago after the Supreme Court sided with broadcasters and said the company was violating federal copyright laws.

“Aereo has been careful to follow the law and the Supreme Court has announced a new and different rule governing Aereo’s operations last week,” the company wrote in a court filing Wednesday. When the Supreme Court called Aereo a cable system that was significant, the company now argues, because it means it’s entitled to be licensed as such under copyright laws.

Four years ago, a lower court rejected a similar argument from a video streaming startup, Ivi, which wanted to be considered a cable system under the Copyright Act. Aereo argued Wednesday that the Supreme Court’s decision overruled that lower court decision and means it should be allowed to restart its operations as a cable company.

Several industry observers, including BTIG Research’s Richard Greenfield, made a similar point a few weeks ago, suggesting that the high court had possibly opened the door for this sort of argument from online video streaming companies.

But Aereo’s new strategy represents a bit of a leap for a company built around the idea of not paying fees to broadcasters.

“I don’t want to be in the business of buying wholesale content and retailing it to consumers. That doesn’t make sense in the long-term,” Aereo CEO Chet Kanojia, told Re/Code’s Peter Kafka in those heady pre-Supreme Court decision days.

This is the second attempt by Aereo (which famously said it didn’t have a Plan B if it lost at the high court) to find some way to salvage its business.

Last week, Aereo issued a call to arms to subscribers, asking them to bombard Congress with calls and emails demanding legislators change the law. Presumably that didn’t go so well, since there hasn’t been much, if any, noise about Aereo from lawmakers since then.

Meanwhile, broadcasters offered a legal eye-roll at Aereo’s new strategy Wednesday.

“Whatever Aereo may say about its rationale for raising it now, it is astonishing for Aereo to contend the Supreme Court’s decision automatically transformed Aereo into a ‘cable system’ under the law,” broadcasters wrote in a letter they filed jointly with Aereo to the court.

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