Which Investors Get Hurt If Aereo Loses?

IAC/InterActiveCorp Chief Barry Diller says Aereo may have to shut down if the Supreme Court rules in broadcasters' favor.

Tim Beyers
Tim Beyers
Apr 8, 2014 at 9:22AM
Consumer Goods

April 22 marks a big date for Aereo. That's when oral arguments begin in its U.S. Supreme Court battle with the nation's major television broadcasters. IAC/InterActiveCorp (NASDAQ:IAC) Chairman Barry Diller has described the case as a must-win for the upstart. In the following video, Fool contributor Tim Beyers explains what happens if the company loses.

For those who don't know, Aereo is an Internet service that grabs over-the-air TV signals and brings them to the Internet for transmission to a wide variety of devices. Viewers in major metro areas such as Boston, Dallas, and New York pay a monthly fee to access either live or recorded content.

So who loses if the Supreme Court rules against Aereo? Diller, certainly. He told Bloomberg that he couldn't see "any path forward" for the business, which could be sold off for salvage. Not exactly what you'd be hoping for from a would-be disruptor that, if history holds, Diller would add to the IAC portfolio, grow, and then spin out as an independent, publicly traded company.

But that's the long-term view. For now, IAC remains a minority shareholder among Aereo's eight investors tracked by S&P Capital IQ. Others include First Round Capital, High Line Venture Partners, FirstMark Capital, Highland Capital Partners, Himalaya Capital Partners, and SV Angel. All told, the company has raised $97 million in outside funding since its founding in 2010.

Now it's your turn to weigh in. Do you believe Aereo can win its Supreme Court case? Do you see it as a long-term catalyst for IAC? Please watch the video to get the full story, and then leave a comment to let us know what you think, including whether you would buy, sell, or short IAC/InterActiveCorp stock at current prices.