FilmOn.com CEO Says He'll Stop Streaming Major Broadcasters

A week after being sued in U.S. District Court in Washington, D.C., online TV service FilmOn.com will stop streaming major broadcasters in D.C. and eventually all over the country, said an open letter sent to U.S. broadcasters by CEO Alki David. Doing business until now as Aereokiller, David’s company continues to call itself FilmOn.com after a recent legal settlement with competing company Aereo. David said FilmOn will replace the local network affiliates, the content of which it’s been streaming online, with independent stations, with which his company will negotiate residual fees. “This model will set a standard by which companies like Aereo will have a tougher time establishing the precedent of not paying broadcasters for the content that they own,” wrote David. Fox, CBS, ABC and NBC didn’t comment.

If FilmOn stops rebroadcasting network TV, it may affect the broadcasters’ lawsuit against it in the D.C. federal court and another in the 9th U.S. Circuit Court of Appeals, said Fletcher Heald broadcast attorney Harry Cole, with no client in those cases. “By pulling off the programming, it could moot out those cases.” He said since both lawsuits are based on FilmOn rebroadcasting unlicensed TV content, the company could ask the court to throw the cases out if the company has stopped the behavior.

Cole also said if FilmOn starts paying for content, it could hurt Aereo’s argument that streaming on-air content shouldn’t require a fee. “By acknowledging that he needs some form of licensing, it does undermine Aereo,” Cole said of David. But Cole said it’s doubtful FilmOn’s shift will cause Aereo, which has won several preliminary court battles in the 2nd Circuit, to change its behavior. A spokeswoman for Aereo declined to comment.

CBS asked a federal judge to dismiss Aereo’s request for a declaratory judgment against the broadcaster, in a Tuesday filing in U.S. District Court in Manhattan. CBS’s motion is a response to Aereo’s suit against the broadcaster earlier this month, in which it asked the 2nd Circuit to rule that its streaming system of individual antennas, functionally identical to Aereokiller’s, doesn’t violate copyright law (CD May 8 p10). In its motion for dismissal, CBS said Aereo’s “anticipatory lawsuit” was an attempt to preempt future suits in cities where the company hasn’t even begun operating. CBS also argued that Aereo’s suit is duplicative of a claim for summary judgment Aereo made in the case brought against it by broadcasters in U.S. District Court in New York, which is still being adjudicated. CBS said if the court won’t throw the case out, it should be held until after the other case has been decided.

David’s letter said major broadcasters have repeatedly refused to negotiate with his company, and blamed them for propping up a business model that “is crumbling from the inside.” He also accused major broadcasters of making “death threats” against him and his family. Though David said at the start of his letter that he’s taking major broadcasters off his service, he also said his company needs them to placate consumers. He also mentioned an attempted deal to license content from NBCUniversal that he said fell though because of high retransmission fees. “As much as I'd like to not have the Majors on our system, they are a necessary evil as the unwitting consumer expects them to be there,” said David.

David also attacked the Nielsen ratings system, which he called the “lifeblood” of TV. He said he had offered to help Nielsen improve its online data, but had been rebuffed. “The Nielsen system is built for 5 channels that existed over 30 years ago. Not a world made up of Cable Satellite and Online Convergence,” wrote David. “The King has no clothes and this why the Networks want to kill FilmOn.com.”