LOS ANGELES, Calif. - Shares of broadcast TV companies rose strongly Wednesday after the U.S. Supreme Court ruled that online TV service Aereo is violating their copyrights.
CBS Corp. shares rose $3.09, or 5.3 per cent, to $61.93; Gannett Co. Inc. shares rose $1.43, or 4.9 per cent, to $30.62; Lin Media LLC shares rose $1.61, or 6.3 per cent, to $27.38; and Journal Communications Inc. shares rose 51 cents, or 6.3 per cent, to $8.62.
The court rejected Aereo's argument that it is merely an equipment provider because it gives subscribers Internet access to free-to-air TV signals captured by thousands of tiny antennas.
The court found the service still amounts to a public performance of copyrighted works, which is the exclusive right of copyright holders.
The ruling could shut Aereo down or force it to enter licensing deals with content owners, potentially increasing what it must charge customers for the service.
Analysts said the ruling preserves the market for retransmission rights — in which cable and satellite TV companies pay broadcasters billions of dollars annually for the right to relay their TV signals to customers.
Research firm SNL Kagan expects those payments to hit $7.6 billion industrywide by 2019, up from $3.3 billion last year.
The ruling has the effect of "lifting the overhang that had weighed on CBS for the past 15 months," Nomura analyst Anthony DiClemente wrote.
As of midday Wednesday, Aereo was still functioning. The lower court, whose ruling was overturned Wednesday, will still have to review factual elements of the case in light of the higher court's decision.
Spokesman Mike Schroeder said in a statement, "Aereo is still evaluating its options."
Shares of larger media conglomerates that are not as heavily reliant on broadcast TV revenue rose more modestly.
Twenty-First Century Fox Inc. shares rose 68 cents, or 2 per cent, at $34.89; The Walt Disney Co. shares gained $1.35, or 1.6 per cent, at $84.03; Comcast Corp. shares rose 62 cents, or 1.2 per cent, to $53.26.
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