Learn more about Peltz-Steele v. UMass Faculty Federation at Court Listener (complaint) and the Liberty Justice Center. The case is now on appeal in the First Circuit as no. 22-1466 (PACER paywall). Please direct media inquiries to Kristen Williamson.

Thursday, September 2, 2021

SDNY rules against Locast, knifes beleaguered free TV

[UPDATE: At 9:47 a.m. today, Thursday, Sept. 2, I received word that Locast is suspending operations, effective immediately.]  

Locast, an online retransmitter of broadcast television, and the American public together suffered a major blow on August 31, as the federal district court in New York handed partial summary judgment to ABC, CBS, Fox, and NBC in the networks' copyright infringement lawsuit.

Locast has irritated me, but only for not expanding fast enough.  Where I live, near Providence, R.I., the service is not available.  It is available in New York to the south and Boston to the north, but access is strictly geo-fenced.  As a result, my family cannot see free broadcast TV without springing for an expensive subscription to a cable service or streaming-channel consolidator.

That's not really Locast's fault.  Broadcasters have reduced their power over the years, making free TV incrementally more difficult to access.  I live just nine miles from the broadcast towers that serve the Rhode Island state capital, but I cannot receive any signal with an interior or window-mounted antenna.

Indeed, the networks seem to want out of the broadcast game altogether.  Kickbacks from online consolidators such as Hulu Live and YouTube TV, and the networks' profits from their own services, such as Paramount+ (and Hulu Live, in part), are more lucrative than broadcasting and come with no FCC regulatory strings attached.  Local affiliates, including vital broadcast news outlets, fall through the cracks, wreaking further havoc in our information market, but that's no matter to the bottom line.  Locast threatened to breathe life back into the corpse of free TV, so the networks pursued the service with a vengeance. 

Locast is a non-profit, and its "business" model is simple.  It sets up a technology hub in a place such as Boston and converts local broadcast signals to online streams.  Home cord-cutters thus have their access to free TV restored through the internet service they already have, no antenna needed.

On the face of it, of course, this business model would constitute copyright infringement for copying and redistributing the broadcast signals.  But Congress, in a rare showing of commitment to the public interest rather than to the profit margins of our corporate overlords, built an exemption into the Copyright Act.  Governmental or nonprofit organizations are permitted to retransmit "without any purpose of direct or indirect commercial advantage, and without charge to the recipients of the secondary transmission other than assessments necessary to defray the actual and reasonable costs of maintaining and operating the secondary transmission service."

Locast is freely available and supported only by voluntary donations.  But streaming is interrupted at 15-minute intervals by 15-second pleas for donations.  Like the ad-free versions of pay-TV services, Locast offers absolution from these interruptions in exchange for a minimum "donation" of $5 per month.  The $5-donation model proved sufficiently successful that Locast was able to cover its operating costs and use the excess to expand to new markets.

And that, expansion, was Locast's sin, in the eyes of the district court.  Judge Louis L. Stanton opined that Congress could have written "maintaining and operating and expanding" into the statutory exemption, but did not.  So Locast's dedication of additional accounts received to expansion was fatal to its claim of copyright exemption.

I find the court's reading of the statute exceedingly cramped.  Locast plainly is spending money to do precisely what Congress intended: making free TV available to people who cannot receive it without hiring a contractor to install an antenna tower.  That the books must balance within each micro-market rather than across live markets, in the utter absence of evidence that a dime has been diverted to any other objective, absurdly splits hairs.

Locast lawyers, joined by the Electronic Frontier Foundation, say they are examining the ruling.  Locast announced yesterday that it is for now ceasing streaming interruptions requesting donations. 

There are ways that Locast can work around its current predicament, I reason. Locast has been supported by some major corporate donors who are not old-school TV insiders, such as AT&T, which contributed $500,000.  Internet service providers such as AT&T benefit from Locast, because retransmissions are streamed into homes, rather than broadcast.  With more careful balancing of the books, it should be possible, if cumbersome, to parse operations between discrete markets and to raise capital to support expansion directly.

It's a shame that such gamesmanship should be required for what is clearly a public service.  And a bigger problem might remain for American information and entertainment consumers in the ongoing, if prolonged, death throes of free TV.  We might hope that Congress would obviate the fray with bold measures that would reinvigorate the landscape of electronic expression by enhancing public-interest limitations on digital intellectual property and guaranteeing access to the internet for all Americans.

We also might hope to see pigs take flight.

The case is American Broadcasting Cos. v. Goodfriend, No. 1:19-cv-07136 (S.D.N.Y. Aug. 31, 2021). I bet Judge Stanton is one of those people who has both cable and Fubo and can't use either one unless someone helps him with the remote.

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