Published On: Fri, Nov 21st, 2014

Aereo files for bankruptcy

IAC/InterActive Corp. Chairman Barry Diller Interview

Aereo Inc, the 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 transmitted them to paying subscribers. That decision effectively forbade Aereo’s business model.

Aereo Chief Executive Officer Chet Kanojia said the decision created “regulatory and legal uncertainty” that proved insurmountable for the New York-based company, which is privately held.

“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 Manhattan, Chief Financial Officer Ramon Rivera said Aereo sought protection from creditors to obtain “necessary breathing room” to sell its assets, recapitalize or restructure.

Aereo has been trying to persuade federal 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 holds 23.3 percent, according to Aereo’s bankruptcy petition. Aereo had raised about $95.6 million in equity financing.

IAC did not immediately respond on Friday to a request for comment.

The 6-3 Supreme Court decision was a victory for broadcasters such as CBS Corp , Comcast Corp’s NBC, Walt Disney Co’s ABC and Twenty-First Century Fox Inc’s Fox network.

Aereo suspended its streaming service soon 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.

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