TiVo buys Aereo name, auction fetches under $2M

Aereo, the streaming start-up that was poised to upend the TV industry until the Supreme Court shut it down, has been sold for scraps.

Aereo’s assets fetched under $2 million at auction, according to a person familiar with the sale. The figure is a far cry from the $90-$100 million that media mogul Barry Diller and other investors put in the company as part of high stakes gamble on copyright law.

“We are very disappointed with the results of the auction. This has been a very difficult sales process and the results reflect that,” said William Baldiga, counsel for Aereo and partner at Brown Rudnick, in a statement.

This outcome likely reflects the legal sword that continued to hang over Aereo even in bankruptcy, as broadcasters pressed their claims for huge copyright damages. As a result, Aereo was sold off in pieces rather than as a company.

The primary winner of the auction appears to be TV recording service TiVo, which acquired Aereo’s trademark along with customer lists and unspecified other assets.

Meanwhile, the holding company RPX, which is a patent troll of sorts, has acquired Aereo’s patents.

The person familiar with Aereo said the company has yet to sell certain other assets, and that it is still looking for other opportunities. (It’s unclear what other assets could be left, one guess is trade secrets and other know-how from the company’s engineering team.)

The person also suggested that the broadcasters, including ABC, NBC, CBS and Fox, were determined to bury Aereo’s technology rather than see it emerge under a new business model.

Until it was shut down last fall, Aereo offered consumers a means of watching and recording TV on mobile devices. While some Aereo content came via partnerships with stations like Bloomberg TV, most of the shows came via over-the-air TV.

Aereo, which provided subscribers with a remote antenna and DVR, claimed it was simply offering consumers a technology akin to a VCR, which is legal under copyright law.

An appeals court judge in New York initially agreed with Aereo’s position, noting that the service was akin to cloud-based DVR’s which courts have found to be legal. The broadcasters prevailed at the Supreme Court, however, in a controversial decision that appears set to sow further confusion over copyright.

Aereo Sale Doc by jeff_roberts881

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An earlier version of this story referring to RPX linked to an unrelated story. The link has been updated.

Broadcasters try to block Aereo asset sale, $90M tax transfer

The TV industry has already shut down Aereo at the Supreme Court and driven it into bankruptcy, but that’s apparently not enough: now CBS, Fox, NBC and other big broadcasters are asking a judge to block any asset sale that would allow the defunct streaming TV company to reinvent itself as a cloud-DVR service.

According to bankruptcy court filings, the broadcasters believe that an asset sale could deprive them of the ability to collect copyright damages related to Aereo’s services. Aereo allowed consumers to retransmit and record over-the-air TV signals via their mobile devices. The Supreme Court shut down the service this summer after six of the nine Justices concluded that Aereo required a license.

That ruling effectively ended a bid by Aereo’s investors to create an internet-based TV service, and forced the company into bankruptcy. The issue now is whether Aereo can re-emerge from bankruptcy with a new business model that is based just on its remote recording technology. While the Supreme Court ruled that the portion of Aereo’s service that allowed consumers to watch live TV infringed copyright, it declined to rule on whether Aereo’s cloud-based recording service — which operated akin to a VCR — was legal.

As the court filings show, the broadcasters believe a bankruptcy sale would let Aereo escape this question by relaunching as a new corporate operation. Here’s the key passage from a motion filed this week (emphasis mine):

If Aereo elects to sell its assets, Aereo should not be allowed to use the automatic stay to evade resolution of the issue as to the lawfulness of time-delayed retransmissions. If allowed to do so, Aereo would, in effect, be using the automatic stay as a device to obtain option value from a prospective purchaser willing to gamble on whether time-delayed retransmissions are infringing.

As the passage notes, broadcasters fear that an Aereo sale could force them to start their copyright campaign anew, since a transaction borne of bankruptcy court would let a new corporate entity operate unencumbered from existing litigation. A sale would let Aereo would get a second act under a new name, in other words.

A $90–$100 million tax carryover

Overall, the bankruptcy court filing is also consistent with the broadcasters’ ongoing strategy, which has been to try to drive Aereo deep into the ground rather than grant it a license or negotiate other legal avenues to make the service work. According to a person familiar with the case, this strategy has also included taking a hard line on copyright damage demands. This legal exposure has, in turn, made it impossible for Aereo to find new investors or another company to acquire it.

From the broadcasters’ perspective, their damage demands have not been about recouping actual losses, since Aereo never had more than 100,000 subscribers to begin with (and the TV content in question was free and over-the-air). Instead, the lawsuit has been about exerting maximum control over TV at a time when more consumers are seeking entertainment options on the internet instead of via traditional cable and satellite bundles.

Finally, the bankruptcy court filings show that Aereo appears to have burned through $90 to $100 million after losing its big legal bet on the copyright issue. As the broadcasters note, those losses could be a valuable tax credit to a company that acquires Aereo — though the broadcasters, for their part, are doing their best to ensure that never happens:

In its Sale Motion, Aereo notes that it has a “so-called net loss carryover for Federal tax purposes of approximately $90 million to $100 million.” (Sale Motion ¶16.) Aereo describes this “tax attribute” as an “asset that some parties would find of significant value in connection with a reorganization or other transaction that would preserve the future use of that attribute under applicable law.” (Id.). Thus, Aereo’s proposed sale process appears to be designed in a way that will allow the insiders to retain control of the company and to take advantage of the net loss carryover.

Here’s the motion, which the broadcasters filed in Manhattan bankruptcy court on Monday:

Broadcasters Objection to Aereo Sale

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Aereo to judge: actually, we’re a cable company after all

Aereo isn’t ready to give up, and just revealed its plan B in a court filing: The company wants to get access to broadcast networks through compulsory licenses, arguing that now that the Supreme Court found it to be like a cable system, it wants to be treated as such (hat tip to the Hollywood Reporter.) That’s a stark contrast from Aereo’s previous stance, but it’s also a maneuver unlikely to succeed, as my colleague Jeff John Roberts recently explained.