Video streaming service Aereo files for bankruptcy
Aereo Inc, the online video streaming company backed by media mogul Barry Diller, has filed for bankruptcy protection.
The Chapter 11 filing on Thursday night came five months after the U.S. Supreme Court said Aereo violated broadcasters' copyrights by capturing live and recorded programs on miniature antennas and transmitting them to subscribers who paid $8 to $12 a month.
That decision effectively forbade New York-based Aereo's business model, an attempt to offer a less-expensive alternative to cable television.
Chief Executive Officer Chet Kanojia said the court decision created "regulatory and legal uncertainty" that proved insurmountable.
"A little over three years ago, the team at Aereo set out to build a better television experience for the consumer," Kanojia said in a blog post. "We knew we had touched a nerve, had created something special, and had a built something meaningful for consumers."
Ultimately, he said, "the challenges have proven too difficult to overcome."
In a filing with the U.S. Bankruptcy Court in New York, Chief Financial Officer Ramon Rivera said getting protection from creditors should provide "necessary breathing room" for Aereo to sell its assets, recapitalize or restructure.
The privately held company had been trying to persuade regulators to declare it eligible for a license available to cable systems, but Rivera said the timing was "uncertain."
Lawton Bloom, a principal at Argus Management Corp in New York who specializes in restructurings and crisis management, was named Aereo's chief restructuring officer.
Kanojia owns 42.32 percent of the company, and Diller's IAC/InterActiveCorp (IACI.O) holds 23.3 percent, according to Aereo's bankruptcy petition. Aereo had raised about $95.6 million in equity financing.
An IAC spokeswoman said Diller was not available to comment.
The 6-3 Supreme Court decision was a victory for broadcasters such as CBS Corp (CBS.N), Comcast Corp's (CMCSA.O) NBC, Walt Disney Co's (DIS.N) ABC and Twenty-First Century Fox Inc's (FOXA.O) Fox network.
Aereo suspended its streaming service, which it said had been available in 11 U.S. metropolitan areas, three days after the decision. On Nov. 12, it laid off 74 employees, leaving 14.
In court papers, Aereo said it had about $20.5 million of assets and $4.2 million of debts.
The case is In re: Aereo Inc, U.S. Bankruptcy Court, Southern District of New York, No. 14-13200.