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Locast a locust or a modern day TV Robin Hood?

The big four US television networks – ABC, CBS, Fox and NBC – have jointly filed a lawsuit against Locast streaming service founder David R. Goodfriend and the Sports Fan Coalition NY (SFCNY).

The plaintiffs claimed that Locast, a non-profit organisation backed by AT&T, has infringed the rule of copyrights by distributing and providing pay-TV content for free over-the-air without paying re-transmission fees and gaining consent.

Conventionally, re-transmission and distribution of content from cable and satellite pay-TV require a fee. Wall Street estimates that re-transmission fees made up about 11% of CBS’ revenue for 2018.

Locast was founded by Goodfriend, a lawyer and executive who formerly worked in Clinton’s Administration, Federal Communications Commission and Dish Satellite TV. Since its launch in 2018, the service has covered 31% of US TV households, including 13 cities and up to 35 million households.

In the filing, the “Big Four” claimed that Locast is not a public service devoted to benefit the public and under the façade of Robin Hood, its funding and operations reveal a commercial purpose. Last May, AT&T added Locast app to DirecTV and U-verse set-top boxes and donated US$500,000 to SFCNY.

The lawsuit is a reminiscence of the lawsuit against Aereo — a provider of antennas to receive pay-TV programmes. In 2014, a consortium of broadcasters had tackled Aereo in supreme courts over similar issues — and CBS stock spiked by 5.9% after the victory.

However, Locast may have a trump card up its sleeve which Aereo did not. The card is that under US Copyright Act 1976, a non-profit organisation is legally allowed to re-broadcast for free, as it serves a public service by extending signal reach.

Five days ago, the National Association of Broadcasters (NAB) released a statement in support of the lawsuit. NAB executive vice-president of Communications Dennis Wharton said: “NAB wholeheartedly backs today’s lawsuit against Locast.

“This firm is thinly disguised as a not-for-profit entity that mirrors failed predecessors Aereo and FilmOn in its bid to legitimise the theft of local TV broadcast signals.”

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