UPDATE 1-Judge refuses to block Diller's Aereo online TV venture

Wed Jul 11, 2012 6:51pm EDT

* Major broadcasters lose bid for preliminary injunction

* Judge said ruling for broadcasters could shut Aereo down

* Some broadcasters, including Fox, plan appeal

* Online venture launched in NYC area in March

By Jonathan Stempel and Yinka Adegoke

July 11 (Reuters) - A federal judge has rejected a bid by major U.S. broadcasters to stop Aereo Inc, an online television venture backed by billionaire Barry Diller, to stop rebroadcasting some of its programming over the Internet.

U.S. District Judge Alison Nathan said on Wednesday that while the broadcasters demonstrated they faced irreparable financial damage if were the venture were allowed to continue, Aereo also showed it would face severe harm if the requested preliminary injunction were granted.

"First and foremost, the evidence establishes that an injunction may quickly mean the end of Aereo as a business," the Manhattan judge wrote in a 52-page opinion.

Walt Disney Co's ABC, CBS Corp, Comcast Corp's NBCUniversal and Telemundo, News Corp's Fox, Univision Communications Inc and the Public Broadcasting Service had filed lawsuits accusing Aereo of copyright violations, even before the service was launched in the New York City area in March for $12 per month.

The broadcasters sought to stop Aereo from streaming programs to phones, tablet computers and other devices, saying they would lose their right to retransmission fees from cable and other companies that rebroadcast their programming, and also lose critical advertising revenue.

In a joint statement, Fox, PBS, Univision and the New York-area stations WNET and WPIX said they will appeal, calling the decision "a loss for the entire creative community."

ABC, CBS, NBC and their lawyers did not immediately respond to requests for comment.

Diller, whose IAC/InterActive Corp provided $20.5 million of start-up financing for Aereo, welcomed the decision.

"Of course I'm happy the judge denied the injunction, and now we can really begin telling television consumers they have an alternative," he said. Diller sits on Aereo's board.

Nathan agreed that Aereo will damage the broadcasters' ability to negotiate advertising and retransmission agreements, given that the service could artificially lower Nielsen viewership ratings and force concessions.

She also said Aereo could reduce traffic to websites of the broadcasters themselves, damaging relationships with content providers and advertisers there.

But Nathan also said Aereo, in addition to facing the risk of closure, could lose employees, the ability to attract new investors, customer goodwill, and its "substantial investments" in the service.

"The balance of hardships certainly does not tip decidedly in favor of (the broadcasters)," she wrote.

The cases are American Broadcasting Cos. et al v. Aereo Inc, U.S. District Court, Southern District of New York, No. 12-01540; and WNET et al v. Aereo Inc in the same court, No. 12-01543.

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