Free-Streaming Player Locast Sued by Major Networks

MANHATTAN (CN) – ABC, Disney, Fox, and NBC Universal teamed up Wednesday for a federal court battle against the streaming app Locast, which rebroadcasts their channels online to subscribers for no charge.

Represented by the Washington firm Williams & Conolly, the networks filed suit this morning in New York. They say Locast, founded by a Dish Network lobbyist and funded in part by AT&T Inc., illegally and unfairly competes with live TV streaming services that pay for permission to retransmit broadcast television by offering live television streams online while refusing to pay for the legally required licenses.

The networks seek damages and a permanent injunction against Locast, which streams local television stations serving 13 markets: New York; Philadelphia; Boston; Washington, D.C.; Baltimore; Chicago; Houston; Dallas; Sioux Falls; Denver; Rapid City; Los Angeles and San Francisco.

When the Locast app launched in early 2018, the company said it was operating similarly to nonprofit “translator” stations that retransmit an over-the-air local broadcast signal to boost the signal strength and expand the availability of local broadcast programming throughout a local market.

The networks balk, however, at Locast’s claims of acting in the public’s interest. “Locast is nothing like the local booster services contemplated by Congress in creating this narrow exemption,” the complaint states. “Locast is not a public service devoted to viewers whose reception is affected by tall buildings. Nor is Locast acting for the benefit of consumers who, according to Locast when promoting its purportedly free service, ‘pay too much.’ Locast is not the Robin Hood of television; instead, Locast’s founding, funding, and operations reveal its decidedly commercial purposes.”

The networks allege in their complaint that Locast’s operations benefit two of the largest commercial pay-TV distributors in the country, Dish Network and AT&T, which have both have integrated Locast apps into their internet-connected set-top boxes.

“Locast is not the noncommercial, community public service it purports to be,” the complaint says. “It is a strategic play funded by and functioning for the benefit of decidedly commercial interests.”

Locast, which was founded by Brian Goodfriend, a current paid Dish lobbyist and former vice president of law and public policy for the cable provider, also received an early loan to operate from a company called IOT Broadband, LLC, whose chairman and CEO, Michael Kelly, is another former Dish executive vice president.

According to the complaint, AT&T, which operates the U-Verse pay-TV service and whose subsidiary DirectTV LLC operates the DirecTV satellite service and the DirecTV Now streaming service, recently disclosed that it made a “donation” of $500,000 to Locast.

Responding to the broadcast the complaint Wednesday, Locast’s attorney touted the company’s independent, nonprofit status.

“The fact that no broadcasters have previously filed suit for more than a year and a half suggests that they recognize this,” David Hosp, a partner at Orrick Herrington & Sutcliffe, said in a statement. “We look forward to defending the claims — and the public’s right to receive transmissions broadcast over the airwaves — in the litigation.”

In 2014, the U.S. Supreme Court ruled 6-3 against similar burgeoning online platform called Aereo, which allowed subscribers to watch live TV on their phones, computers and tablets using a mini-antenna technology.

The Supreme Court ruling signaled the demise of Aereo, which filed for Chapter 11 bankruptcy protection in late 2014. The DVR company TiVo later acquired it in a $1 million deal.

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