The move comes as Aereo, which recently won a major appeals court ruling on nearly the same issue in New York, prepares to offer its service in Boston and 22 other markets as soon as this month. CBS and other broadcasters have vowed to sue to stop Aereo in those new markets, a threat that appears to have led it to file the new court action. (The new filing, reported by AllThingsD, refers to recent public statements and Twitter feeds by CBS executives, including one that says “we’ll sue”).

So what exactly is the meaning of Aereo’s new lawsuit? Here’s what one copyright expert familiar with the issue had to say:

Aereo’s decision to file a separate declaratory judgment action at this stage is unorthodox. They’ve prevailed on a preliminary injunction motion at the district and circuit court level — which means that both the Southern District and the 2d Circuit have ruled they are likely to succeed on the merits — so it’s unusual to seek a declaratory judgment on the same issues.

Recall that the appeals court decision from last month already protects Aereo for the immediate future in the U.S. Second District, a territory that covers the states of New York, Vermont and Connecticut. This means that the new declaratory action Aereo is seeking will not really change any facts on the ground but could give the company another favorable verdict — but not one that will determine its fate in Boston (which is in the First Circuit) or any of the other legal jurisdictions where Aereo plans to open shop.

The most likely explanation, then, is that the move is part of the increasingly pitched PR battle between Aereo and the broadcasters who, in another recent appeal, accused the upstart of creating “havoc” and “massive disruption” in the television industry. The broadcasters have also threatened to pull their signals altogether and distribute their channels, including Fox and ABC, only on pay TV.

Aereo, for its part, argues that its technology, which assigns every subscriber a personal antenna, is akin to private viewing through a DVR system.  The company’s CEO, Chet Kanojia, has accused the broadcasters of extracting exorbitant fees by forcing viewers to accept cable bundles stuffed with channels they don’t want to watch.

Aereo’s new lawsuit, therefore, gives it a way to gain the upper hand on the media message (for a short time at least) – and possibly pick up some additional legal language from a judge who has taken the company’s side in the past.

In the bigger picture, the Aereo fight is part of a great game over the future of the TV industry. Aereo, which is backed by a major investment from media mogul Barry Diller, has also been the subject of acquisition rumors by satellite provider Dish. Broadcasters fear that an alliance between the two companies could provide an end-run around the existing system that requires cable and satellite providers to pay for use of the over-the-air signals.

The final outcome could well end up at the Supreme Court given a current split between the courts in New York and a district court in California, which shut down a similar service to Aereo last year. In the meantime, it’s possible that a patchwork of decisions could result in Aereo being legal in half the country and forbidden in the other half.

In another recent development, the four major sports leagues have joined the anti-Aereo chorus by filing court papers to support the broadcasters’ request that a full panel of the Second Circuit reconsider its decision. The NFL, NBA, NHL and Major League Baseball argue that the appeals court was wrong to consider Aereo a “private” transmission like singing in the shower:

An individual who sings a copyrighted lyric in the shower engages in a private performance […] A commercial service (like Aereo) that retransmits the broadcast of a copyrighted television program to thousands of paying subscribers at the same time is not in any way comparable.

Here’s a copy of Aereo’s new lawsuit:

Aereo Complaint for Declaratory Judgment – FINAL FILED

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In a new court filing (embedded below), the broadcasters claim the decision “threatens to cause massive disruption to the television industry” and “will wreak commercial havoc,” and request a full panel of the US Second Circuit Court of Appeals to revisit the ruling.

The start-up Aereo has been at the center of a storm in recent months because its technology threatens to blow-up the existing model of pay TV, which is based on selling viewers a bundle of channels, that include over-the-air stations like NBC, ABC, CBS and Fox. Aereo is backed by a $58 million investment from media mogul Barry Diller and others, and lets customers watch and record TV without a subscription for $1 a day or $8 a month.

In the past, other companies have retransmitted TV signals over the internet but broadcasters quickly smashed them for copyright infringement. Aereo, however, has survived two major court challenges thanks to its technology which assigns a mini-antenna (see pic below ) to each subscriber; the service is now live in New York City and is slated to arrive imminently in 22 more markets.

In the new filing, broadcasters howl that Aereo’s individual antenna system is just a loophole to get around a copyright regimes that requires any company that plays over-the-air signals, including cable and satellite firms, to pay retransmission fees. The brief also cites a paidContent story to warn that Aereo wants to team up with distributors like Dish network and Time Warner Cable to expand its reach.

On a broader level, the legal manœuvreing is part of a great game between Aereo and the broadcasters over the future of TV that could end up at the Supreme Court. In the coming battle, the broadcasters are pinning their hopes on a recent California court case, which shut down an Aereo clone and rejected the theory that a private antenna means a transmission is not “public” under copyright law – a theory accepted by two out three judges on the Second Circuit court.

In the new filing, the broadcasters rely heavily on the opinion of dissenting judge Denny Chin, who described Aereo’s technology as a “sham” and a “Rube Goldberg” device that “over-engineered” to dodge copyright.

While the dissent and the California case provide the broadcasters with ammunition, the request for a review by all of the judges on the New York court is a long shot. This is because, unlike other appeals courts, the Second Circuit almost never agrees to hear so-called “en banc” appeals; in the event it did rehear the case, the judges would be reluctant to accept the broadcasters’ invitation to declare that they were wrong on an earlier case that formed the basis of their opinion for Aereo.

This means the Supreme Court — or Congress — is the broadcasters’ best hope. Time is not on their side, however, because it would take years for the legal case to be heard and decided. By that time, technology and consumer habits for TV may have changed dramatically.

The CEO of Aereo will offer his two cents on the bigger picture of TV at paidContent Live which is taking place on Wednesday in New York City.

Legal types — here’s a marked up version of the broadcasters’ very well drafted legal brief:

Aereo en Banc Petition

This weekend I sat on my in-laws’ living room couch and read “Snow Fall: The Avalanche at Tunnel Creek,” a longform story in the New York Times , on my iPad. “Snow Fall” marks the launch of a new publishing effort at the Times. The paper is partnering with Byliner, the e-singles startup run by former magazine folk and based in San Francisco, to publish around a dozen e-singles in 2013. (Working definition of e-single: A story somewhere between 5,000 and 30,000 words — shorter than most books, longer than most magazine articles — usually nonfiction, and sold as an inexpensive ebook.) Byliner is selling an expanded version of “Snow Fall,” for $2.99, at digital bookstores.

The Times partnership is the latest in a string of such deals for Byliner. The company also recently launched an experimental subscription program and a partnership with Esquire.

Meanwhile, Atavist is pushing ahead with in-app subscriptions. And Atavist has a bunch of money coming in from Barry Diller and Scott Rudin, who are working with the company to launch their own publisher, Brightline, which will focus on e-singles and other works.

Amazon’s U.S. Kindle Singles store now contains 283 singles. In February, I reported that the company had sold two million Kindle Singles; as of September, that number was up to 3.5 million, and Amazon just expanded the program to the U.K., where it will include new entries by bestselling British authors as well as most of the American Kindle Singles. Many Byliner Originals are available through Kindle Singles, and they’ll be crossing the Atlantic for the first time with the program’s U.K. expansion.

How are e-singles actually selling? Several of them hit the New York Times ebook bestseller list this year. A few of Amazon’s Kindle Singles authors have done quite well. That’s a lot for an individual, but not so much for a company. E-singles are cheap, a couple bucks a pop, so they are not likely to drive major revenue for publishers: With most Kindle Singles priced at $1.99, that’s only $7 million or so — and Amazon only takes 30 percent of it, making the revenue basically a rounding error. Smaller companies have it tougher: How Byliner makes money is something of a mystery. Atavist has a two-pronged business model, and the profitable part is selling its app platform to other publishers. The ebooks themselves could become more profitable with the launch of Brightside, but that hasn’t been the case yet.

Still, I love this format. Here’s why:

byliner e-singles

E-singles are a true digital-native format

They don’t cannibalize other formats. It’s nearly impossible to find a magazine that will run a 10,000-word story these days (much less a magazine that will run your 10,000-word story — even if you’re a professional journalist). Many of these stories simply would not have been published in print, and that’s not because they’re not good enough. They just weren’t quite a fit for magazine or book publishers. Now the projects can come to light, and journalists who might once abandoned these stories because they weren’t sure how to pitch them can make a little money off them.

They may not drive a lot of revenue, but they’re also cheap to produce

Newspapers and magazines and individual authors can afford to experiment with these; if they already have the work done, why not try to sell it? That’s what the Minneapolis Star-Tribune did with “In the Footsteps of Little Crow,” which ran in the paper as a six-part series and was also released as an e-single for $2.99. It hit the NYT ebook bestseller list at #13, and the iBookstore’s history list at #8.

They’re the format for our time

Their rise has correlated with the rise of read-it-later services like Pocket and Instapaper, which allow users to save web content to consume later, at their leisure. E-singles fit perfectly with the curl-up-with-your-iPad phenomenon. They’re long enough that you don’t blow through them in ten minutes, but most can be read in under an hour.

What changes in 2013?

The number of gatekeepers

Anyone can publish a short ebook, but if you want it to be a Kindle Single — in a separate section of the Kindle Store, with extra marketing and promotional support from Amazon, and with a 70 percent royalty even on a work priced under $2.99 — you’ll have to submit it to the Kindle Singles editor. Most of the authors seeing success with this format are working either with Kindle Singles, or with a company like Byliner or Atavist. You can go it on your own, but your single may get lost in the shuffle.

That could change next year as other digital bookstores pay more attention to the format. Apple has a separate section of the iBookstore for shorter reads. Barnes & Noble launched Nook Snaps, a so-far unimpressive answer to Kindle Singles. Those efforts can give shorter works a promotional push. We could also see more companies, or individual authors, do a Kickstarter campaign to fund either a line of e-singles or just a single work. That’s what Matter did.

The digital-only part

Byliner just signed a deal with Ingram to distribute its titles in print. “We increasingly hear from our readers and writers that they would like our stories available in print as well as digital form,” Byliner CEO John Tayman said. That’s great as long as the price stays very low — ideally the print price should match the ebook price — and nobody tries to make print a big part of their business model. Otherwise, e-singles really will be replicating journalism’s extraordinary challenges in the same old place (paper), with not much upside.

The cost proposition, maybe

The NYT’s “Snow Fall” feature cost a lot to pull off, and people are already arguing that while the NYT could do it most other outlets won’t be able to afford it. But if you’re a newspaper already paying a journalist to do a story that will run in parts in the paper, there is no reason not to bundle it together and publish it (or publish it with a few extra components) and sell it separately. Of course, lots of outlets can’t afford to pay journalists to carry out that type of research in the first place, no matter where it eventually runs.

That’s been a problem for a long time now, though, and the best part of e-singles is that they’re not tied to any single old media company. They’re not a digital replica of anything so much as they are a format unto themselves.

Photo courtesy of Flickr / B_Zedan 

Byliner Plus

The San Francisco-based Byliner publishes fiction and nonfiction e-singles it calls “Byliner Originals,” from authors like Margaret Atwood, Amy Tan and Jon Krakauer. It sells them through ebook retailers like Kindle, Nook and Apple, usually for $1.99 or $2.99. Now Byliner is testing a program called Byliner Plus, which offers unlimited access to Byliner Originals (39 of them and growing) as well as exclusive stories from authors like Susan Orlean and Sebastian Junger (often those that were previously published but have not been available online) for a monthly fee. Right now, an introductory offer allows a generous 60-day free trial, after which the subscription is $7.99 a month.

Byliner CEO John Tayman stressed to me that the program is experimental. “For some time now readers have been asking if they can just subscribe and receive each new Original automatically, and we wanted to accommodate that request,” he said. But the final price of a monthly subscription hasn’t been settled yet: While I received the $7.99 offer in an email and it is apparently available through December 3, another page on Byliner’s site says a subscription is $12.99 a month. “Nothing has been settled as of yet,” Tayman said. “We’re testing a variety of things during this period, including feature sets and price points, to see what resonates best with readers and provides them with the best value and experience.”

If you sign up for Byliner Plus, the stories can’t be downloaded to an e-reader. Rather, they’re available through a responsive-design HTML5 site and can be read on computers, tablets and smartphones. Users can also save the stories for offline reading.

Tayman explained how authors are paid: “We’re sharing subscription revenue with authors based on the amount of their work read within the subscription service, on a pro-rata basis. We’ll also be paying authors (and distribution partners) affiliate fees for new subscribers they direct to Byliner.”

Atavist

The Brooklyn-based Atavist publishes original e-singles and also sells a digital reading software platform. (In addition, the company is working with Barry Diller and Scott Rudin to launch a digital publisher called Brightline.) Atavist has published 18 e-singles so far, most for $2.99, and already sells them through its iOS app (as well as through various digital bookstores). Now readers can also sign up for in-app subscriptions: to start, three months for $6.99. Nieman Journalism Lab reports, “Authors will still get a cut, even if subscribers aren’t paying for a specific story; at the end of each month, subscription money will be divvied up based on the number of downloads for each individual author.”

According to the press release, “Brightline plans to publish original short and long form literary fiction and nonfiction, with its first titles expected to be released in mid 2013.” Atavist, which publishes e-singles in addition to licensing its technology platform, will also continue to publish independently.

Atavist is handling the technology but is also a large part of the venture — the ebooks will be published under the Atavist brand. (It’s unclear how print books will be handled or where they’ll be sold.) This summer, according to the New York Times, “Mr. Diller and Mr. Rudin discussed paying as much as $10 million for a controlling interest in Atavist. A partnership grew out of those discussions.” Through that partnership, “Atavist and Brightline will exchange an undetermined amount of minority equity interests in each other’s ventures, and IAC will provide $20 million in capital to build out Brightline as a publisher in addition to making investments in Atavist.”

“Publishing will change more in the next ten years than it has in the last hundred…” Diller said in a statement. “We have the resources and they have the ability, using Atavist’s technology and digital smarts, to play a continuing and significant role in that transformation.”

It’s unclear what kinds of authors Brightline is looking to sign up, though the NYT says it “will pay big advances to compete for big-name authors.” It’s also unclear if the ebooks will be available only through The Atavist’s website and apps or through other retailers like Amazon as well. And since The Atavist does not publish print books, it is unclear how and when those will be available. However, in both the press release and the NYT article, one thing seems clear: Barry Diller is willing to spend a lot of money on the venture.

Photo courtesy of Flickr / Jeff Howard

Reddit’s success and growth since the acquisition by Advance is unusual, as Carr notes — the history of web-based communities and other similar digital businesses after they get acquired by media giants is not exactly filled with happy stories. Typically, the larger media entity imposes various restrictions on the asset it has acquired and ruins whatever made it successful in the first place. But for whatever reason, Advance didn’t do this with Reddit: there were no failed attempts at “synergies” with the rest of the company, and no tinkering with the formula that made the service so appealing to so many — namely, a frontier-style freedom similar to the somewhat notorious community 4chan.

Communities are fragile — don’t mess with them

So the most obvious thing that a media company could learn from Reddit is the benefit of leaving well enough alone, especially where your users are concerned. In other words, when you have something that seems to be working, the best way to avoid screwing it up is to just let those who built it do whatever they want with it (within reason, of course). As Carr describes in his piece:

Steve Newhouse, the chairman of Advance.net, decided very early on that his company would not be the blob that ate Reddit, and for the most part, left well enough alone. “We had some ideas about what would be good, but it might not have worked,” Mr. Newhouse said. “We paid attention to the community instead.”

That’s a pretty rare comment for a media executive to make, especially if they have paid tens of millions of dollars for an asset like Reddit (although the New York Times‘ ownership of About.com — which is being sold to Barry Diller’s IAC — was reportedly also fairly hands off). And it’s probably rare in part because media companies like Advance don’t typically buy digital-only startups like Reddit. But the other key to what Newhouse said is that at some level he recognized that the power behind Reddit came from the community itself, and that messing with it would be a huge risk (although it should be noted that communities can also carry some risks, since content can be posted that runs afoul of various laws).

Although he didn’t mention it, there’s a pretty powerful contrary example to Reddit: namely Digg, the pioneering link-sharing and discussion community that ruled the early days of what was then called “Web 2.0″ and drove so much traffic to websites that it could literally shut their servers down in a matter of minutes. Digg — driven in part by the need to please the financial backers who gave it tens of millions in venture financing — messed with its design and functionality to the point where it destroyed what community it once had and was eventually sold for spare parts.

Newspapers need to figure out how community works

These lessons are especially important as newspapers like the New York Times become much more reader-focused, since reader contributions now make up more than half of the paper’s revenue — having recently overtaken advertising revenue as the single biggest contributor to the bottom line. And they are equally important to newspapers like the Times-Picayune and others that are cutting back on print and trying to justify their move to either a mostly web-only or fully digital-only strategy. What is likely to be the single biggest determining factor in the success of either of these ventures? An engaged community of readers — much like those at Reddit.

As we’ve seen with the site’s coverage of breaking news stories like the mass shooting in Aurora, Colo. and another in Canada, the Reddit community can be an incredibly powerful engine for reporting and for the distribution of real-time information. Why has no major newspaper tried to invest in or build this kind of community? Not only could it produce news-related benefits, but getting to know your readers better has other advantages as well. The NYT has tried to implement some low-level community features such as reader membership with special benefits, but has not gone much further.

Advance has taken a lot of heat for what has happened in Ann Arbor, Michigan since the daily newspaper there stopped printing and went digital-only. According to a recent piece in the American Journalism Review, many readers find that the website version of the paper is a pale imitation of the original, with a sharply reduced staff producing underwhelming content. And there is widespread concern about what will happen to New Orleans as the newspaper there stops printing several days a week and becomes digital only, because of the role that the printed paper is said to play in the community.

As they try to move online, or become reader-supported the way the New York Times is, more newspapers and other media outlets are going to have to get serious about building community — and that means more than just trying to get a bunch of Twitter followers who will retweet a headline. Reddit is a great example of a real community, and Advance has clearly seen the power of what that kind of community can do given the right circumstances. But can it take those lessons and apply them elsewhere? It and other newspapers are going to have to figure out how if they want to survive online.

Post and thumbnail images courtesy of Flickr users Christian Scholz and jphilipg

Reuters reported last Tuesday that Diller’s IAC/Interactive was making a late-stage bid for About.com, which was in the early stages of selling itself to Answers.com for $270 million. The New York Times reported on its Media Decoder blog on Sunday afternoon that the $300 million cash deal will be officially announced Monday.

The New York Times bought the About Group in 2005 for $410 million. ”About’s early expertise in search engine optimization, expert content and revenues from cost-per-click and display advertising made it a valuable component of our portfolio for the past seven years,” Arthur Sulzberger, Jr., NYT Company chairman, said in a statement. ”This sale will allow the Times Company to focus on the development and growth of our core brands locally, nationally and on a global scale.”

IAC, which is #32 on this year’s pc50 list of the world’s most successful digital media companies, has over 50 Internet businesses in 30 countries, including search sites Ask.com and Dictionary.com as well as online dating sites like Match.com, local listing sites like Citysearch and media sites like College Humor.

All Things Digital’s Peter Kafka, who originally broke the news that the NYT was selling off About.com, reports that Diller’s all-cash offer “helped sway the Times and its Allen & Co. bankers. Answers and its private equity backers Summit Partners and TA Associates were going to finance the deal with debt, and would have included equity in Answers as part of the transaction.”

Photo courtesy of Flickr / Jeff Howard

Diller, who used to run Paramount and Fox, filed a complaint this week against BarryDriller.com, a new service that offers TV-on-the-go to west coast markets. The complaint notes Diller’s fame based on works like Raiders of the Lost Ark and Grease, and accuses BarryDriller of cyber-squatting, trademark infringement and stepping on Diller’s right to publicity. Diller had initially joked about BarryDriller, telling the Wall Street Journal, “I had hoped that if they steal my name they’d do it for something more provocative.”

Diller’s suit comes on the heels of a Fox lawsuit that says BarryDriller infringes the copyright for shows like The Simpsons and Glee. BarryDriller is run by David Alki, who launched the short-lived FilmON, a TV streaming service that the entertainment industry smothered in 2010. He appears to have named the new venture BarryDriller in an effort to generate publicity and, possibly, to stick a finger in the eye of Diller.

While Fox may be on the same side as Diller against BarryDriller, it is also part of a major effort by broadcasters to shut down his Aereo business, which offers TV and DVR services for around $12 per month. Fox and other broadcasters say Aereo, like BarryDriller, infringes copyright though they have failed so far to win an injunction.

Technology advances lead to legal pile-up

New technology and changing notions of TV is what lies at the heart of the legal pile-up. Specifically, Diller’s Aereo has been relying on a legal loophole that says one-to-one transmission is not broadcasting and therefore shouldn’t be considered copyright infringement. To make the argument hold up, Aereo points to a novel technology that gives every subscriber a dime-size antenna. Each antenna relays a personalized stream of over-the-air TV signals to subscribers’ iPhones.

Aereo also says its service is the legal equivalent of remote DVR recording technology, which courts have said doesn’t infringe copyright. But the broadcasters disagree, and claim Aereo is hiding behind a technicality. They says the “one antenna one user” theory doesn’t change the fact that Aereo is retransmitting shows without permission.

The dispute is about law, but also about money of course. The broadcasters recently won a drawn-out battle to force cable companies to pay them for retransmitting their shows and now, one suspects, they want Aereo to pay too. Diller, for now, says Aereo has no obligation to pay. BarryDriller’s Alki, on the other hand, has offered to pay retransmission fees.

If they build it, will anyone watch?

The legal snafus that have greeted new services like Aereo and FilmOn are part of a long-running pattern in which incumbent broadcasting interests want to control platforms against new disrupters.

In this case, however, copyright and copycats like BarryDriller may not be Aereo’s biggest problem. Instead, there is a question of whether the service will be viable from a business perspective. Aereo, which for now is only available in New York, is experimenting with new pricing incentives to get people to try the service but for now its prospects look uncertain at best.

Dan Rayburn, an analyst with Frost & Sullivan, recently told the LA Times that Aereo was “dead in the water for multiple reasons” even if it can win its court challenge.

Part of Aereo’s problem may be that there simply may not be that many situations where people want to pay to watch broadcast TV on a mobile device.

Here’s the legal complaint, which asks the defendant to hand over the BarryDriller.com name and to pay damages to Diller:

(Ed note: an earlier headline suggested it was Aereo who filed the suit. It is Barry Diller who is suing).

Diller v BarryDriller

On Friday, Fox Networks filed a new suit against a start-up called BarryDriller.com (a play on the name of TV mogul and Aereo investor Barry Diller).  BarryDriller charges $5.95 a month to supply personal antennas that let subscribers “scan the airwaves and tune the antenna to receive whichever broadcast station signal the subscriber chooses.”

Neither Fox nor Aereo is amused. Fox claims that BarryDriller is infringing the copyright of The Simpsons, Raising Hope and Glee and violating its trademark. The broadcaster adds that the start-ups use of personal antennas is not defense:

“It simply does not matter whether BarryDriller uses one big antenna to receive Plaintiffs’ broadcasts and retransmit them to subscribers, or millions of antennas, “so tiny [one] fits on the tips of your finger,” as Defendants claim it does. No amount of technological gimmickry by Defendants changes the fundamental principle of copyright law ….”

The lawsuit mirrors one that Fox and other broadcasters are pursuing against Aereo. That case also turns on a legal loophole based on whether Aereo’s one-antenna-to-one-person transmission system means it is not broadcasting to the public. In a surprise ruling last month, a New York judge awarded round one to Aereo by refusing to grant the broadcasters a preliminary injunction.

There are a handful of differences between Aereo and BarryDriller:

• BarryDriller is targeting the Los Angeles market unlike Aereo which is for now available only in New York

• BarryDriller says it is willing to offer broadcasters a retransmission fee similar to what cable operators pay

• Its website suggests that BarryDriller viewer need an external antenna to receive TV on any device (Aereo transmits directly to Apple products like Safari, the iPad and iPhone)

[Update: BarryDriller founder David Alki wrote to say that his service is actually in four major markets and that it will add three more next week.

Alki is also the founder of FilmON, a TV streaming service that the entertainment industry smacked with an injunction in 2010.]

Aereo’s Barry Diller responded to his rival’s launch last week by telling the Wall Street Journal, “I had hoped that if they steal my name they’d do it for something more provocative.” Aereo executives said they hadn’t heard of the service and added, “It is unfortunate that they appear determined to try to trade on Aereo and its board members’ successes and reputation.”

Here’s Fox’s complaint:

Fox v BarryDriller

IAC Chairman Barry Diller, an investor in the startup, has insisted all along that Aereo is legal because the antennas are leased to subscribers who control them. After the ruling, he told the New York Times: “I did think we were on the side of the angels…certainly for consumers — good to see the judge saw it that way.”

The plaintiffs, including Fox, Tribune Company, PBS, and Univision, quickly issued a statement of their own, promising to appeal:

Today’s decision is a loss for the entire creative community. The judge has denied our request for preliminary relief – ruling that it is ok to misappropriate copyrighted material and retransmit it without compensation. While we are disappointed, we will continue to fight to protect our copyrights and expect to prevail on appeal.

U.S. District Judge Alison J. Nathan ruled that the networks and television stations suing Aereo had some points in their favor but were arguing a legal position that was unlikely to win in court based on precedent set by the earlier case Cartoon Network vs. CVC Holdings (Cablevision). In that case, an appellate court agreed with Cablevision that individual delivery to customers of shows recorded via off-site DVR was not the same as a transmission to the public. Aereo’s individually operated antenna-DVR contention dovetails with Cablevision. The judge accused the plaintiffs of trying to twist that ruling by arguing some elements should apply and others should not — and concluded “faithful application of Cablevision requires the conclusion that Plaintiffs are unlikely to succeed on the merits of their public performance claim.”

But Aereo didn’t emerge unscathed. It doesn’t change the results but Judge Nathan agreed that the networks and television stations suing are threatened “with irreparable harm by luring cable subscribers from that distribution medium into Aereo’s service, diminishing Plaintiffs’ ability to benefit from their content in ways that are fundamentally difficult to measure or prove with specificity.” She described the possibility of imminent irreparable harm as “substantial, but not overwhelming.”

She also pushed aside Aereo’s claims, and that of supporters, that shutting down technology that transmits public airwaves would not be in the public interest. The judge pointed out that “Aereo is a business and does not provide ‘free’ access to broadcast television.”

The U.S. District Court case dates back to March, just two weeks after the startup was unveiled and before the $12-a-month service started. As my colleague Jeff John Roberts wrote then, the case was “likely to turn on a distinction rooted in the analog era that distinguishes between transmitting to one or to many viewers.” Aereo argued that each subscriber would operate his or her own antenna and that DVR-like use allowing time shifting would be individually controlled as well. After nearly three months of discovery, Judge Nathan held a two-day hearing. This ruling comes six weeks later.

In the ruling, Judge Nathan said of all the theories the plaintiffs offered, “including infringement of the right of public performance, infringement of
the right of reproduction, and contributory infringement,” only one mattered in the quest for a preliminary injunction that would bar it from operating and in a narrow way. That’s the claim of “copyright infringement by publicly performing Plaintiffs’ copyrighted works.”

That was narrowed even more by limiting it to “the aspects of Aereo’s service that allow subscribers to view Plaintiffs’ copyrighted television programs contemporaneously with the over-the-air broadcast of these programs.”

(Judge Nathan also pointed out in the footnotes that Aereo wants to be viewed as a tech platform, not a service.)

When the startup’s plans went public earlier this year, networks began asking for payment in exchange for permission to transmit the signal (retransmission fees). But Diller says he told them: “When you get Radio Shack to pay you a slice of profit for selling an aerial, we’ll pay you.”

Diller also said in March that Aereo, which is available only in New York City, will go national. This ruling should help with the legal aspect. The jury on profitability is going to be out for a while.

Update: React continues to roll in as people parse the ruling. In a separate statement, plaintiff CBS told Reuters: “This case is not over by a long shot. We intend to immediately appeal this decision to the Second Circuit and seek expedited consideration.”

All broadcasters are avid about retrans fees but it’s close to a religion for CBS CEO Leslie Moonves. NBC also plans to appeal, according to Reuters.

And we got this statement from ABC Wednesday night:

“The main event in this case has always been a decision by the Appeals Court. We remain confident in our position and look forward to the opportunity to present our argument to that Court.”

Aereo CEO Chet Kanojia savored this victory: “Today’s decision shows that when you are on the right side of the law, you can stand up, fight the Goliath and win.” (A company with Diller on its side isn’t exactly fighting Goliath with pebbles.) But Aereo also acknowledges more legal challenges are ahead: “The cases remain technically pending, however, Judge Nathan’s opinion has spoken eloquently, clearly and comprehensively about the issues in the case. It is Aereo’s hope that in light of the Judge’s opinion, the plaintiff broadcasters will reconsider their resistance to new technology and embrace consumer access and innovation.”

It’s July. Don’t expect hell to freeze over.