The sleepy court battle between streaming service Locast and the broadcasters trying to sue it out of existence, Aereo-style, heated up this week, with both parties filing letters to the federal judge overseeing the case. 

Williams & Connolly LLP partner Gerson Zwelfach, who represents the plaintiffs, a group including ABC, CBS, FOX and NBC, sought to shoot down Locast’s base defense, which uses the Copyright Act of 1976 to claim that it’s acting within the law to stream local feeds of network O&Os and affiliates to consumers on a “non-profit” basis. 

For one, Zwelfach argues that Locast’s scheme—which makes it really hard to use the service unless a user donates at least $5.50 a month—is tantamount to actual capitalism, not the public service the plaintiffs claim. 

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"Although Locast calls the amounts it extracts from users 'donations,' courts 'look beyond mere formal labels and consider the substance of the transaction,'" reads Zwelfach’s letter to U.S District Court Judge Louis Stanton. ”Here, the substance of the transaction is clear: Locast demands users pay a monthly fee in exchange for uninterrupted services.”

Meanwhile, representing the defendants, the Sports Fans Coalition NY and its founder, consumer rights attorney David Goodfriend, Orrick, Harrington and Sutcliffe LLP attorney David Hosp responded that Locast’s streams remain “secondary transmissions” legally transmitted under nonprofit circumstance. 

“No one owns SFCNY,” Hosp wrote. ”It pays no dividends, no distributions, and no salaries. It pays typical, market prices for its costs, such as physical space, equipment, technical upkeep, and internet access. And it defrays those costs by seeking and accepting donations, including donations from viewers, for the actual and reasonable costs of maintaining and operating the secondary transmission service. Plaintiffs cannot dispute any of these facts.”

Currently situated in 31 designated marketing areas across the U.S., and touting 2.5 million registered users, Locast streams feeds of local broadcast stations for free. Users who don’t want their streams disrupted every 15 minutes with a come-on for donations need to agree to donate at least $5.50 a month to Sports Fans Coalition NY.

Calling the service “Aereo 2.0”—a nod to a similar for-profit streaming service shot down by the U.S. Supreme Court nearly a decade ago—the Big Four broadcasters filed suit against Goodfriend and Sports Fans Coalition NY in 2019, aiming to shut down Locast. 

The case is scheduled to go to trial in September. 

“The Copyright Act of 1976 is clearly on our side, and we believe we will win,” Goodfriend said in a statement, re-issued to Next TV two weeks ago when we checked on the case. “These broadcast giants reap billions of dollars from charging users for programming that’s supposed to be free and are attempting to use their copyrights to maintain market power and force consumers to pay more. The law allows for nonprofits to retransmit local TV channels and to ask for donations to help cover costs. Locast clearly meets these guidelines.”

Locast, the free TV station streaming service, is now available in 16 markets with its launch in Seattle today (Oct. 30), according to the Sports Fans Coalition New York, which launched the service. 

“November tends to be the rainiest month of the year in Seattle, so local weather reports mean more to commuters, families, and business travelers right now. Here’s a forecast for our friends in Seattle: expect more rain, but better access to your local news, weather, and other critical information on Locast,” said founder David Goodfriend. 

The addition comes less than two weeks after Locast announced it had added Atlanta and Phoenix. 

Broadcasters have sued Locast over the service, which relies on an exception for nonprofits in copyright law to stream the stations without asking their permission or negotiating a fee for carriage.

Locast was launched by the Sports Fans Coalition in part as a way to give viewers access to sports programming during retrans blackouts.

Locast does not charge, but does seek a donation from users.

Alternative ways for MVPDs to get stations that don’t involve going to the local bar or switching to an antenna reduces broadcasters’ leverage in retrans negotiations. for example, AT&T during its recent impasse with Sinclair, suggested Locast as an alternative to stations blacked out by Sinclair.

In their suit, network lawyers said Locast is nothing like the TV translators it purported to resemble. “Locast is not a public service devoted to viewers whose reception is affected by tall building[s] … Instead, Locast’s founding, funding and operations reveal its decidedly commercial purposes,” they said.

Locast had two weeks ago it would be adding more markets before the end of the year, and if it can raise enough via donations, eventually all 210 markets.

It apparently took some major retransmission-consent blackouts — CBS-DirecTV, Nexstar Media Group-DirecTV — combined with the looming STELAR reauthorization to persuade broadcasters to go after free TV-streaming service Locast.

The Locast service, which has been operating since January of 2018, has recently been billed as an option in retrans blackouts.

The Big Four broadcast networks’ owners and other broadcast companies have filed suit in U.S. District Court for the Southern District of New York, charging copyright violations.

Locast was launched by the Sports Fans Coalition in part as a way to give viewers access to sports programming during such blackouts — via a copyright exemption for nonprofits that retransmit TV-station signals, like the translators that extend TV station signals to hard-to-reach areas. Locast exploited that exception to offer the stations without asking permission or negotiating a fee.

Until now, broadcasters had kept their powder dry, declining to comment or act on Locast even as it expanded to more major markets and stations and grew as a potential tool for multichannel video programming distributors in retransmission disputes.

That broadcast inaction had been in stark contrast to the past response to for-profit services Aereo and FilmOn, which found themselves in court (and Aereo in bankruptcy) after trying to stream TV signals without first negotiating for carriage.

AT&T added the Locast app to its arsenal and promoted it as an option for CBS viewers to get TV stations over the top during a recently-ended blackout, pointing out that football season was fast approaching and referring to the new Locast app on DirecTV Genie and U-verse TV internet-connected receivers.

AT&T also recently donated $500,000 to Locast, which asks for contributions to cover operating expenses.

Obviously, alternative ways for MVPDs to get stations that don’t involve going to the local bar or switching to an antenna reduces broadcasters’ leverage in retrans negotiations.

One theory as to why TV stations weren’t previously rushing to court had to do with networks charging stations for reverse compensation while also striking deals to put their programming on streaming services, arguably reducing network content’s value to TV stations counting on the ads they place in their versions of the programming. Some stations are OK with getting the extra eyeballs via Locast, which includes their local ads.

But the networks also are powerful members of the National Association of Broadcasters, which said it is squarely behind the suit.

In their suit, network lawyers now say Locast is nothing like the TV translators it purported to resemble. “Locast is not a public service devoted to viewers whose reception is affected by tall building[s] … Instead, Locast’s founding, funding and operations reveal its decidedly commercial purposes,” they said.

Given that the copyright carveout for translators says they must be nonprofit and have no direct or indirect commercial purpose, DirecTV parent AT&T’s $500,000 donation — combined with Locast founder David Goodfriend’s lobbying history with Dish Network, another MVPD — might have given those broadcast lawyers the ammunition they sought. A source familiar with the strategy said it was understood the networks have been actively working on the suit, waiting for the right arguments and deciding where to file.

Veteran attorney Andy Schwartzman of the Benton Foundation, who said broadcasters have abused their free licenses to “coerce” cable operators into overpaying for carriage, believes Locast can make that public-service argument.

“Locast has taken advantage of a provision in the law to give viewers a better and easier way to watch those stations on their TVs, computers, phones and tablets,” Schwartzman said.

Legal issues aside, Adonis Hoffman, chairman of Business in the Public Interest, whose clients have included broadcasters, said that to the degree that Locast does reduce retrans leverage, it could hurt smaller and minority broadcasters more than larger ones. Smaller station groups are more dependent on retransmission dollars than larger, more diversified broadcasters.

It will now be up to a federal judge in New York — and perhaps appeals courts down the line, judging by the years-long Aereo fight — to decide if Locast can keep taking broadcast TV over the top.