A Blog by Jonathan Low

 

Jul 4, 2019

How A 'Non Profit' Lets Users Stream Network Content For Free

But this is not a public service or radical anti-establishment tactic. The service is being promoted by big telecoms as part of their strategy in their battle for control with networks and other content providers. 

Drew Fitzgerald reports in the Wall Street Journal:

Viewers can stream their local ABC, NBC, Fox and CBS stations to watch prime-time broadcast programming, network news and major sporting events like National Football League and National Basketball Association games. (It) relies on an exception the law made for nonprofit groups. The organization on its website says its service “is well within the bounds of copyright law” because it asks only for donations and doesn’t act as a commercial enterprise.
A streaming service that offers free broadcast TV to cord-cutters is winning support from some big media players, five years after a similar venture was quashed in court.
But the emergence of Locast, which makes over-the-air programming available on smartphones and other devices, is likely to get a cold reception from broadcasters, many of which rely on the kind of fees Locast isn’t paying to bolster their profits.
Locast allows people without a pay-TV subscription to view local broadcasts of sports and news. The service—backed by the nonprofit Sports Fan Coalition—has launched in several large markets, including New York and Los Angeles, and last week received a $500,000 contribution from AT&T Inc. T 0.41%
Locast is wading into thorny territory. Viewers can always watch over-the-air broadcasts for free with antennae, but federal copyright law requires that companies get a TV station’s consent to carry their feeds over cable, satellite or the internet.The fees station owners charge for that permission makes up a growing part of their revenue. Big broadcasters, too, are earning more revenue from TV stations they own and from the cuts of the fees collected by affiliates.
A similar service called Aereo suspended operations in 2014 after the Supreme Court ruled its business model ran afoul of a 1976 law restricting the retransmission of over-the-air-broadcasts.
Locast relies on an exception the law made for nonprofit groups. The organization on its website says its service “is well within the bounds of copyright law” because it asks only for donations and doesn’t act as a commercial enterprise.
“We’ve been very careful to adhere to the letter and the spirit of the law,” Locast Chairman David Goodfriend said. “Precisely because we’ve made our legal reasoning public, we’ve staved off a lot of criticism.”
Using Locast, viewers can stream their local ABC, NBC, Fox and CBS stations to watch prime-time broadcast programming, network news and major sporting events like National Football League and National Basketball Association games.
Mr. Goodfriend, an attorney and lobbyist who has worked for satellite-TV provider Dish Network Corp. , said Locast is designed for young people more comfortable watching video online than through a TV set. It also is for “cord-cutters” who can’t watch local sports and news where their local broadcaster’s signal is too weak.
A spokesman for the National Association of Broadcasters declined to comment.
Locast’s workaround wouldn’t affect AT&T’s deal with the NFL to carry certain games on DirecTV because that package, Sunday Ticket, is limited to out-of-market games. An NFL spokesman declined to comment.
Mr. Goodfriend says his service has collected more than 250,000 sign-ups, though he wouldn’t disclose how many of those viewers are still using the service. Locast doesn’t yet cover the entire country, though it has set up antennae in enough big markets to cover more than 30 million households.
Mr. Goodfriend said he launched with a line of credit from a wealthy donor who prefers to remain anonymous. The benefactor isn’t Dish Chairman Charlie Ergen, he said, but is an entrepreneur.
The service is available online, but viewers must allow their device to transmit their location to ensure they are viewing channels within the markets where they are being broadcast.
AT&T earlier this year added Locast to its DirecTV and U-verse set-top box menus. Dish already has done the same for customers with its Hopper boxes. AT&T has about 24 million pay-TV customers in the U.S. Dish has about 12 million subscribers.
An AT&T spokesman declined to comment. The company said in a news release that its donation will help “make free broadcast content available to consumers and offer them more choice.”
The pay-TV giant’s support shows that the venture is on firmer legal footing than Aereo, according to Rich Greenfield, an analyst for brokerage BTIG. He estimated that pay-TV companies spend more than $8 billion to carry broadcasts that are free to watch over the air, costs that they pass on to customers.
“That’s why your cable and satellite bills keep going up,” he said. Supporting a service like Locast could give AT&T some leverage against broadcast networks in future discussions regarding retransmission fees.
Companies like AT&T aren’t helping Locast “out of the goodness of their hearts,” Mr. Greenfield said. “But there’s a real consumer benefit to this being successful.”

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