In July, leading streaming TV provider FilmOn X was deemed to be entitled to compulsory license as a cable system by U.S District Court Judge George Wu in Los Angeles. The Hollywood Reporter called it “a legal earthquake” and it reignited discussion of what major BTIG analyst Rich Greenfield once told the Wall Street Journal was “Financial Nirvana” for FilmOn X CEO Alki David.
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Naturally, the major network broadcasters are furious and are scrambling to mount a coherent defense against the onslaught or modernity. New court papers filed rehash arguments Wu has already dismissed.
Even as the FCC moves toward modern, technology-agnostic rules on streaming TV and OTTs, the broadcasters argue that “Internet-based retransmission services, such as defendants’, are categorically ineligible for compulsory licenses.” Wu’s decision was regarded as “well reasoned” by legal analysts at Law360, the Electronic Frontiers Foundation, Litigation Daily and the Los Angeles Business Journal among others.
Wu’s ruling referenced the Supreme Court decision about now-defunct Aereo in June of 2014. While the court ruled against the use of micro-antennas, it also stated in its ruling that companies like FilmOn X were “for all practical purposes a traditional cable system.” and should have all the rights and responsibilities of such systems.
As Wendy Davis wrote in Mediapost: Wu said that language supports FilmOn’s argument. “It is … about as close a statement directly in defendants’ favor as could be made,” Wu wrote. Wu also said that he wasn’t persuaded by a 2012 opinion by the 2nd Circuit Court of Appeals in New York, which ruled against ivi TV in a similar dispute. The judges in ruled that ivi TV — which streamed television programs over the Internet — wasn’t entitled to a compulsory license.”
FilmOn X had filed an amicus brief with the Supreme Court before it heard the Aereo case arguing just this point: that it was happy to uphold all responsibilities of a cable system and pay all necessary fees. Since then the FCC has met with FilmOn X’s attorneys in its effort to update its rules. The FCC has made it very clear the old rules are out of date and seems poised to update in favor of companies like FilmOn X.
The proof that the broadcasters are simply circling their wagons in an effort to protect their interests at the expense of consumers and innovation is in their filing: They say “granting compulsory licenses to Web-based services would severely constrict television broadcasters’ exclusive public-performance rights, thus rendering them less willing to develop new broadcast programming.”
FilmOn’s response to the networks’ filing is expected this week.