DARE TO STREAM
TAUNTING THE NETWORKS, AN APP STREAMS FREE TV
NEW YORK — On the roof of a luxury building at the edge of Central Park, 585 feet above the concrete, a lawyer named David Goodfriend has attached a modest 4-foot antenna that is a threat to the entire TV-industrial complex.
The device is there to soak up TV signals coursing through the air — content from NBC, ABC, Fox, PBS and CBS, including megahits like “This Is Us” and Sunday’s broadcast of Super Bowl LIII. Once plucked from the ether, the content is piped through the internet and assembled into an app called Locast. It’s a streaming service, and it makes all of this network programming available to subscribers in ways that are more convenient than relying on a home antenna: It’s viewable on almost any device, at any time, in pristine quality that doesn’t cut in and out. It’s also completely free.
If this sounds familiar, you might be thinking of Aereo, the Barry Diller-backed startup that in 2012 threatened to upend the media industry by capturing over-the-air TV signals and streaming the content to subscribers for a fee — while not paying broadcasters a dime. NBC, CBS, ABC and Fox banded together and sued, eventually convincing the Supreme Court that Aereo had violated copyright law. The clear implication for many: If you mess with the broadcasters, you’ll file for bankruptcy and cost your investors more than $100 million.
Goodfriend took a different lesson. A former media executive with stints at the Federal Communications Commission and in the Clinton administration, he wondered if an Aereo-like offering that was structured as a noncommercial entity would remain within the law. Last January, he started Locast in New York. The service now has about 60,000 users in Houston, Chicago, Boston, Philadelphia, Dallas and Denver as well as New York, and will soon add more in Washington.
Goodfriend, 50, said he hoped to cover the entire nation as quickly as possible. “I’m not stopping,” he said. “I can’t now.”
The comment is basically a dare to the networks to take legal action against him. By giving away TV, Goodfriend is undercutting the licensing fees that major broadcasters charge the cable and satellite companies — a sum that will exceed $10 billion this year, according to the research firm Kagan S&P Global Market Intelligence. For cable customers, the traditional network channels typically add about $12 to a monthly bill.
With consumers increasingly willing to piece together their own packages of content — paying a few bucks to Netflix here, a few to HBO there — anything that encourages people to cut their cable cords is a challenge to the cable TV empire. That calculus makes tiny Locast, whose modest website (“Help us free your TV!”) asks for donations starting at $5, perhaps the most audacious media experiment in years.
‘DO YOU KNOW YOU’RE SUPPOSED TO GET TELEVISION FOR FREE?’
With a shaved head and a short mustache, Goodfriend looks much younger than his age, and he speaks with the enthusiasm and the cadence of an earnest law student.
“We really did our homework,” he said. “We are operating under parameters that are designed to be
within the law.”
The copyright code has an exemption for nonprofits. Goodfriend, who does not draw a salary, said he has collected $10,000 in donations, mostly in $5 increments. He took out a high-interest loan, at around 15 percent, to fund the operation, which to date has cost more than $700,000.
Goodfriend is not a rich tech entrepreneur or a wealthy heir — just a lawyer who has made a decent living. Locast could still meet the fate of Aereo and be sued into financial oblivion by the networks. So why is he doing this?
The answer is partly principle, and partly intellectual mischief: With his public-private background, he has spotted an imbalance in the media ecosystem, he said, and decided to give the whole thing a shake.
“I ask people all the time, ‘Do you know you’re supposed to get television for free?’” Goodfriend said during an interview in Central Park, gesturing to a gaggle of visitors. “Most people under 50 don’t get it.”
Although his practice is in Washington, where he also teaches law at Georgetown and lectures at George Washington University, Goodfriend had come to New York to inspect the installation of the antenna, on the Trump International Hotel and Tower.
(This is another area where Locast has to operate carefully: The organization must install signal equipment in every city where it operates, because all broadcast stations are regional and retransmissions can be made only to local residents. If you live in, say, Miami, you can’t get Locast until Goodfriend puts up an antenna there.)
More Americans are receiving over-the-air TV signals free lately — about 16 million households, up from 11 million eight years ago, according to Nielsen. But that number still pales in comparison with the 90 million homes that pay for video content, whether cable or satellite or Netflix.
Goodfriend wonders how many young people are even aware that in the beginning, TV was free for everyone. “Our society got way over-commercialized in the ’40s and ’50s, when media policy was being hammered out,” he said. “As a result, we don’t have stuff for the public anymore.”
Goodfriend’s argument is infectious, especially when he frames the issue as David versus Goliath, in the form of the big networks.
“The American people have given you something really valucompliant able, the airways, for free,” he said, talking about the broadcasters, his eyes popping at the word “free.” Slowing down for emphasis, he added: “So shouldn’t we get something back for free? Which is great television. That’s the social contract, right?”
THE ENEMY OF MY FRENEMY
Goodfriend is the epitome of a media insider and Beltway fixer. During the Clinton administration, he was a deputy staff secretary — the office is sometimes referred to as the nerve center of the White House — and from 1999 to 2001 he worked as legal counsel to the FCC. He spent time as Charlie Ergen’s vice president for law and public policy at the satellite-TV provider Dish, and with his wife, Sue Emmer, he owns an advisory firm that counts Google, PayPal and the Weather Channel as clients.
It’s the kind of history that one needs to take on the broadcasters. The contemporary history of TV and copyright law is something like a Dungeons and Dragons script — several competing story lines hastily merged together to bring about a conclusion to the game.
The short-short version goes something like this: By the 1990s, after decades of legislative tussles over how copyright owners should be compensated, the networks won a provision that required providers like Comcast or Dish to negotiate a fee, known as “retransmission consent,” to carry their signals. Aereo’s 2014 loss in the Supreme Court is rooted in that framework.
Locast started as a thought experiment in one of Goodfriend’s lectures at Georgetown. He was reviewing the Aereo case and wanted to show how its ruling might impact the public interest.
“I had to teach them that more often than not, it’s through huge stakeholders battling it out that change happens,” Goodfriend said. “There should be something that challenges the broadcasters.”
After Locast debuted, the cable and satellite providers quickly took notice. A free streaming service that captured broadcast signals could benefit their business if it meant they no longer had to bother carrying network stations and bargain for fees.
The cable and satellite companies typically negotiate agreements with broadcasters every three years. The former want to pay the least possible; the latter want as much as they can get. When the providers and broadcasters can’t come to agreements, customers suffer blackouts.
That happened on Jan. 2 during a standoff between Charter Communications, the nation’s secondlargest cable operator, and Tribune, which owns local TV stations affiliated with the major broadcasters. Football fans in some areas missed a Jan. 5 playoff game between the Seattle Seahawks and the Dallas Cowboys, which aired on Fox.
When customers called Charter to complain, service representatives, depending on the region, would alert subscribers to Locast as a way to get programming despite the blackout. Nine days later, the two sides reached an agreement, with Charter agreeing to pay more to carry the channels.
Cable and satellite carriers have long railed against retransmission fees. Ergen, the billionaire who controls Dish, has been one of the most vocal opponents of the fees, and given Goodfriend’s ties to the company, many people in the industry believed Ergen was somehow backing Locast. (Ergen had tried to buy Aereo’s assets when it went into bankruptcy but eventually backed off.)
“No, Charlie hasn’t given me any money,” Goodfriend said. But he has asked. “Charlie just said, ‘Good luck.’ He’s been very encouraging. I’m still working on him to get some funding.”
Ergen declined to comment. The networks were also mum on Locast: CBS and NBC declined to comment, and ABC and Fox did not respond to inquiries.
NETWORKS’ CHOICE: SUE OR NOT?
Goodfriend said he would welcome a legal challenge from the networks. But the broadcasters’ deep pockets would make them a formidable opponent.
“I’d give them a 50 percent chance for prevailing, only because they’ll have the money for the lawyers,” said Jessica Litman, an expert on copyright law and a professor at the University of Michigan law school.
She considers Locast legal, but that may never be tested — that is, the broadcasters may be wary of giving Goodfriend’s startup the spotlight of a big legal fight.
“A loss for the networks is a lot more risky than a win would be,” Litman said.
Initially, Aereo escaped legal scrutiny. “Nobody touched us, even when we were adding customers,” its founder, Chet Kanojia, said in an interview. That changed when Diller put his money in. “That lit the fuse,” Kanojia said.
Goodfriend is soliciting corporate sponsorships, and is in talks with Samsung to make Locast available on its smart TVs.
“I don’t pretend to know how all this ends,” he said. “And if you look at how much this is costing and where I am right now, you’d say, ‘Dude, you’re screwed!’ But I haven’t even really started to fight. I’m not giving up.”