Big Broadcasters Sue Non-Profit Locast Streaming Service

The four major broadcast networks have filed a suit in federal court to shut down Locast, a nonprofit streaming service funded in part by AT&T Inc. and founded by Dish Network Corp. lobbyist David Goodfriend that offers their feeds to subscribers for no charge.

The Wall Street Journal reports CBS Corp. , Walt Disney Co.’s ABC, Comcast Corp.’s NBCUniversal and Fox Corp. argue that Locast is retransmitting the signals of their local TV stations without permission, in violation of copyright law. The fees that broadcasters receive from pay TV distributors have become crucial to their long-term survival, and there is concern that if Locast grows in popularity, it could cut into that revenue stream.

Locast has positioned itself as a free alternative to consumers who are tired of rising cable bills, in addition to serving as a distribution alternative for people who can’t get local TV signals through their antenna. In the lawsuit, the broadcasters argue that Locast is a pawn for AT&T and Dish, two of the largest pay TV distributors in the country. The suit says Locast’s primary reason for existence is to help them avoid paying to carry broadcast content.

“Locast is not the Robin Hood of television,” said the lawsuit, which was filed in U.S. District Court in the Southern District of New York. “Instead Locast’s founding, funding and operations reveal its decidedly commercial purposes.”

Broadcasters also said when Locast retransmits their signals it strips out vital information including Nielsen codes that are used to measure ratings, according to the lawsuit. At the same time, Locast, a nonprofit, is gathering its own customer data and requiring registration, “even though there is no technological reason to do so.”

“Locast has been operating for more than a year and a half, and no broadcaster has filed until now,” said David Hosp, an attorney at Orrick Herrington & Sutcliffe LLP, representing Goodfriend. Hosp said the group’s non-profit status and the fact that it was not charging for the service put it on “sound legal footing.”

Reuters reports Goodfriend, a lawyer who also worked for the Clinton administration and the Federal Communications Commission, launched Locast in early 2018 in New York City, and the service now covers 30% of U.S. TV households, including the nine largest markets.

The case draws parallels to Aereo Inc, a startup launched by Barry Diller in 2012 that streamed broadcast TV signals to subscribers for $1 a day or $80 per year. Like Locast, Aereo did not pay the broadcasters for the retransmission.

Aereo was sued in 2012 by numerous broadcasters. The case went to the U.S. Supreme Court, which ruled the next year that Aereo violated copyright law, making it illegal. Aereo ceased operations.

Launched in early 2018, Locast says it has signed up more than 250,000 users. The service isn’t yet available nationwide but is present in many of the country’s largest TV markets and reaches more than 30 million households.

While Locast markets itself as a free alternative, the broadcasters note that it seeks donations during its retransmissions and “promises that the commercials will abate if viewers commit to the recurring monthly ‘donation.’