Nov. 07--Tech start-up Aereo Inc., blocked by the Supreme Court in its effort to distribute broadcast TV signals online, said it is laying off most of its workforce and shutting its Boston office.
"We are continuing to conserve resources while we chart our path forward," Aereo executive Virginia Lam said. "This was a difficult but necessary step in order to preserve the company."
In a notice to government officials, the New York company said Thursday that 43 employees will be laid off next week in Boston, its engineering hub and biggest office. Altogether, about 60 employees will be let go and about a dozen managers and employees will remain, according to a person familiar with the matter.
In June, the Supreme Court dealt a major blow to the operations by ruling that Aereo's service ran afoul of the Copyright Act. The company had been streaming local TV stations' signals over the Internet via remote antennas, charging customers $8 to $12 a month for the antenna and a digital recorder.
Aereo had argued that it was just an antenna service and therefore didn't have to comply with copyright law. The Supreme Court disagreed, saying the company was more like a cable service and, therefore, was subject to copyright law.
Laura Martin, an analyst with Needham Co., said Aereo's move Thursday did not surprise her.
"I think in the end, Aereo will not survive in any form," she said. "Aereo was a flawed concept to begin with because it was illegally stealing copyrighted signal."
Since the high court's ruling, the company has done an about-face to stay afloat. Aereo said that because the Supreme Court essentially declared it a cable system, it is entitled to a compulsory license. That license allows cable systems to transmit copyrighted materials for a fee.
Aereo asked the Federal Communications Commission last month to expand the definition of multichannel video programming distributors to cover online companies.
"Consumers have long complained about how their cable service forces them to buy channels they never watch," FCC Chairman Tom Wheeler said in a blog post announcing his plan to modify the commission's definition.
"The move of video onto the Internet can do something about that frustration -- but first Internet video services need access to the programs," he wrote.
A federal court in New York entered a nationwide injunction against Aereo in October, rejecting the idea that it was entitled to a compulsory license. The injunction prevented the company from transmitting live broadcast programs. As a result, Aereo said, investors fled.
"It is now clear that at this time, we are unable to obtain additional funding that would prevent the need to close our operations," the company said in a letter to its Boston employees.
If the definition of such distributors is expanded, Aereo may qualify for the compulsory licenses.
lauren.raab@latimes.com
sarah.parvini@latimes.com
