Major broadcasters sue free broadcast streaming service Locast

ABC, CBS, Fox and NBC are suing to shut down Locast, a non-profit, over-the-air broadcast TV streaming service that they say serves as a commercial prop for AT&T and Dish Network Corp.

Why it matters: The lawsuit has been a long time coming. Critics have argued that Locast's offering is similar to that of Aereo, another over-the-air broadcast streaming service that was shut down in 2014, shortly after the Supreme Court ruled against Aereo in a similar copyright case brought by broadcast networks.

“Locast is simply Aereo 2.0."

Details: In a lawsuit filed in a federal court Thursday, the networks claim that Locast, which launched last year, violates a 1976 federal copyright law by illegally transmitting their broadcast signals to customers for free.

• Locast argues that a legal exemption approved by Congress decades ago shields them from having to pay for the retransmission rights because Locast was created as a non-profit servicing a local jurisdiction.
• But plaintiffs say Locast shouldn't be shielded by the exemption, since the service isn't truly local and because Locast is being propped up by Pay-TV companies for "decidedly commercial purposes." As proof, they point to its founding by a Dish lobbyist and $500,000 in donations from AT&T earlier this year.

How it works: Locast's model presumably benefits pay-TV services, like AT&T and Dish, who typically have to pay heavy transmission fees to rebroadcast their content to their customers.

• For Pay-TV providers, redirecting broadcast traffic to a free service could weaken the leverage that broadcast networks have to charge the Pay-TV services for their content, because viewership to paid services would presumably go down.

• The plaintiffs argue in their lawsuit that the free access would also impact their advertising revenue. Locast strips measurement watermarks from the signals that the networks use to measure viewership for selling ads.

Yes, but: For consumers, it's a great deal. Today, consumers can access their favorite broadcast channels for free by using TV antennas in their homes. Locast allows them to access their favorite broadcast channels for free via the internet.

The big picture: The spat is part of a larger existential crisis facing the traditional TV industry. With a record number of people "cutting the cord," or cancelling their Pay-TV subscriptions for cheaper digital alternatives, fights between TV content owners and distributors have grown more frequent and more intense.