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Late Friday afternoon, Barry Diller got a troublesome e-mail. The chairman of IAC/InterActiveCorp found out that he was being served with a subpoena to sit for a videotaped deposition in a lawsuit against Aereo, the Diller-backed TV streaming service that is being sued by all of the major broadcasters. Since Friday, Diller and other Aereo investors have been furiously fighting broadcasters’ attempts to force them to give testimony and turn over sensitive documents.
In a court filing Monday, Leonard Lesser, an attorney for the investors — including IAC, FirstMark, First Round Capital, Highland Capital Partners, Lauder Partners and SV Angel Management Holdings — attacked the subpoenas, saying they “exceed all rational bounds” and “are clearly intended to interpose unnecessary hassle and delay.”
The broadcasters are gearing up for a judge’s decision on whether to grant a preliminary injunction against Aereo, which was introduced in February and sued in March. Diller, who put up $20.5 million in financial backing, spoke highly of the new web company, which touts thousands of subscriber-assigned antennas, as a service that “pries over-the-air broadcast television out of [a] closed system.”
Now the broadcasters want to find out more. The plaintiffs had a limited window for discovery before the preliminary injunction hearing and waited till nearly the last second before delivering their demands for videotaped depositions.
The investors are being asked to submit testimony on the following:
“Your consideration of, involvement in, and communications concerning Aereo or the Aereo Service, including without limitation Aereo’s business plans, the market for Aereo or the Aereo Service, the current or future competitors of Aereo or the Aereo service, and the potential impact of Aereo or the Aereo Service on broadcast television networks and stations, or the producers of broadcast television programming.”
In addition, the investors are being asked to produce documents pertaining to communications and presentations regarding Aereo.
But the investors are fighting back, questioning the overbroadness and lateness of the demands, the confidential nature of the documents sought and the “extremely sensitive” nature of how the investors make their investment decisions and analyses.
The investors also tell the judge that the subpoenas were procedurally defective, including that they were not signed by any attorney and never tendered a witness fee.
But perhaps most of all, the relevance of testimony by Diller and others is in dispute. According to a memorandum to support motions to quash the subpoenas, “Plaintiffs’ counsel offers no explanation as to why testimony from IAC or FirstMark is needed concerning, for example, ‘Aereo’s business plans,’ and why it could not more easily be obtained by deposing Aereo.”
Lesser points out that the plaintiffs previously told the judge that they needed to know more about the technology involved — “how a signal gets into [Aereo’s] system, how it works its way through their system and how it leaves their system” — and that subject of how the company was funded isn’t material.
The judge has scheduled a telephonic hearing for 4 p.m. on the investors’ motions to quash.
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