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TV networks say Aereo is 'indeed a retransmitter' -- and must pay

Top TV broadcasters want Aereo shut down and an expert said in court this morning that the company is less an antenna-rental service than an Internet delivery system.

NEW YORK -- A group of television broadcasters this morning tried to show a federal court that Aereo, the fledgling Internet-video service, is much more like Netflix and Hulu than an antenna-rental service -- and that it therefore has to pay to use their programs.

Greg Sandoval/CNET

Aereo maintains that the company's business model immunizes it from paying for programming the way Netflix does. The broadcasters say this is nonsense, and this morning asked the District Court for the Southern District of New York for a preliminary injunction that would require Aereo to cease operations.

To grant that, the court must be convinced that Aereo's service poses immediate or irreparable harm to the TV broadcasters. The proceeding was scheduled to continue this afternoon and likely into tomorrow.

In March, some of the nation's biggest broadcasters filed two separate lawsuits, both of which allege that Aereo violates their copyrights and illegally retransmits their shows. The case represents just the latest in a long list of challenges mounted by Internet companies to the traditional distribution model of broadcast TV. In most of the more recent cases, the tech companies attempted to cash in on loopholes in copyright law.

Aereo, formerly known as Bamboom Labs, takes scores of tiny TV antennas -- each about the size of a fingertip -- and connects them to the Internet. Each Aereo subscriber uses the Web to control his or her own high-tech rabbit ears to watch over-the-air television. Over-the-air television is freely available to anyone who owns an antenna, but the broadcasters still argue that Aereo's business is illegal.

With U.S. District Court Judge Alison Nathan presiding, the broadcasters called Martin Franks, an executive vice president of policy and planning for CBS (which is also the parent company of CNET). Franks said that Aereo's attempt to use CBS' programming without paying for it was harmful because cable companies do pay, but wouldn't if CBS allowed other companies to have it for free.

Franks added that CBS is hurt again because it doesn't receive advertising revenue from Aereo -- and once more if consumers drop their cable subscriptions in favor of Aereo.

Michael Elkin, one of the attorneys representing Aereo, tried to show that Aereo's business has had little effect on broadcast TV. He got Franks to acknowledge that he doesn't know if any of Aereo's users were cord cutters or whether Aereo had affected the ratings of CBS' shows.

Elkin, who was one of the attorneys who successfully defended Veoh in the benchmark copyright case UMG vs. Veoh, got Davis to acknowledge that he thought DVRs are a bigger threat to CBS' business than Aereo.

More to come