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Federal Court Shuts Down Aereo's Final Argument to Save Itself

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The news for TV startup Aereo isn't getting any easier. The Second Court of Appeals has decided that Aereo will not be allowed to make its one final argument, kicking it back to the district level.

The service, which allowed customers to stream and record live television over the Internet, wants to argue that it's actually a cable company, which would entitle it to pay lower royalties in order to rebroadcast copyrighted content.

Aereo lost a case brought on by broadcasters at the Supreme Court in June which demanded that Aereo pay for distributing content as a "public performance."

Aereo argued that because it gave each subscriber his or her own antenna, its service was simply a cloud-based DVR, functionally comparable to a cable box with video recording capabilities or a VCR. The court decided that the purposeful difference in technology "did not distinguish Aereo's systems from cable systems, which do perform publicly."

Related: Aereo's Plan B: Fine, We're a Cable Provider

Aereo also argued that the ruling would produce a chilling effect on innovation in the cloud computing industry in general but the Court decided differently.

"Given the limited nature of this holding, the Court does not believe its decision will discourage the emergence or use of different kinds of technologies," the decision reads.

If founder Chet Kanojia wants to continue to operate Aereo, even as a less disruptive and more conventional cable company, he must make his argument at the district level, a document from the Second Court reads.

It's unclear, however, whether or not the company will continue its fight.

"We have decided to pause our operations temporarily as we consult with the court and map out our next steps," a letter reads on the company's website. "The spectrum that the broadcasters use to transmit over the air programming belongs to the American public and we believe you should have a right to access that live programming whether your antenna sits on the roof of your home, on top of your television or in the cloud."

Related: 7 Technologies That Are Disrupting the Cable TV Business

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