Locast, a little-known nonprofit behind a free streaming service, sued ABC, NBC, CBS and Fox on Friday, alleging that the television networks colluded against its business.
Locast streams network shows and sports programs through a free app that relays broadcast feeds online. People can get the streams without a cable or satellite plan, potentially cutting off licensing fees to the broadcasters. (More traditionally, viewers can also receive broadcast signals over the air, at no charge, with a digital antenna.)
In July, the networks banded together to sue Locast, saying it had violated their copyrights.
They also say Locast had chipped away at the revenue they get from pay-television operators like AT&T and Comcast. The networks are expected to receive more than $10 billion in such fees this year.
The broadcasters’ lawsuit also named David Goodfriend, a former media executive and lawyer with stints in the Federal Communications Commission, who started Locast in January 2018.
Under federal law, broadcast stations must provide their signals free to the public, making network programming easily available through the use of an antenna. But broadcasters won a provision in copyright law in the 1990s that required pay-TV providers to negotiate what are known as retransmission-consent fees to carry those signals.
“We believe the broadcasters’ lawsuit was brought without basis as part of a larger plan to unlawfully limit the public’s right to access that free programming,” David Hosp, a lawyer for Locast, said in a statement.
Locast argues that its service complies with copyright law because, as a nonprofit entity, it is allowed to act as a so-called signal booster for the broadcasters’ programming.
The broadcasters disagree. “We trust the courts to see right through this facade and recognize Locast for what it is — not a public service organization but a creature of certain pay-TV interests with an entirely commercial agenda,” said Gerson Zweifach, an attorney for the broadcasters, in a statement.
Locast’s countersuit, filed in U.S. District Court in Manhattan, is the legal response to the broadcasters. In addition to denying their allegations, the nonprofit, led by Goodfriend, put a twist on the proceedings, arguing that the big broadcasters have “colluded” as part of an effort to undermine and shut down Locast by “threatening business retaliation” against any potential partners.
The complaint cites YouTubeTV as one example of a company that got cold feet. YouTubeTV, which is owned by Google, sells a streaming service that replicates a cheap cable bundle.
According to the complaint, Google executives alerted Locast in April that the networks had warned the tech company not to allow YouTubeTV to provide access to Locast. If it did, according to the complaint, Google would be “punished by the big four broadcasters.”
The broadcasters — working together — could put pressure on Google (and other pay-TV operators) by refusing to sell cable channels that are allied with the broadcast networks, the complaint suggests.
ABC and ESPN, for example, are both controlled by the Walt Disney Co. NBC and the USA cable channel are owned by NBCUniversal, while the broadcast station Fox and the cable network Fox News are controlled by the Murdoch family. CBS, which owns the Pop TV and Showtime cable networks, recently agreed to merge with Viacom, which owns MTV and Nickelodeon.
Locast sits mostly under the radar, but it has gained in popularity at a time when more consumers are watching television digitally. More than 700,000 users are signed up in 13 cities, including Chicago, Los Angeles, New York, San Francisco and Washington.
The networks have argued that the service is designed to rob them of licensing fees, calling Locast a “rogue streaming service skirting the law for the benefit of telecom giants” in their complaint, which was also filed in the U.S. District Court in Manhattan.
Tensions around programming costs have increased as more viewers cut the cord. On Thursday, over 2.5 million Dish subscribers lost access to Fox broadcasts after Fox and Dish couldn’t agree on a contract renewal.
Although Locast relies on donations from viewers, it accepts money from corporations and recently received $500,000 from AT&T, which also operates the DirecTV satellite service. When a fee dispute blacked out CBS for more than 6.5 million AT&T television subscribers for a few weeks this summer, AT&T encouraged its users to try Locast.