TV Broadcasters Settle Digital Lawsuit, but 'Aereo-Like' Service Won't Die (Exclusive)

Alki David Headshot - P 2011
Gareth Cattermole/Getty Images

Alki David Headshot - P 2011

Broadcast networks are having a fit over Aereo, but the Barry Diller-backed TV streaming company could have some competition of its own.

Alki David, a rich, eccentric media personality, tells The Hollywood Reporter that his FilmOn company -- which distributes TV digitally -- has deployed more than "2.5 million antennas and large raid drives in major cities all around the country" and will return the big networks to his subscription TV streaming service.

All of this comes despite a confidential settlement Tuesday whereby David agreed to pay broadcasters $1.6 million to end a lawsuit against FilmOn. David also agreed to a permanent injunction.

But that's not the end of it. Despite agreeing to the injunction, David says his service is "Aereo-like" and is not subject to being blocked via injunction. Far from ending the dispute, David's war with CBS, NBC, Fox and ABC looks primed to become more heated. To make matters even more interesting, David plans to launch an "over-the-air premium channel" in the Los Angeles market and promises it will be available nationwide by the end of next year.

David is currently heating up the tabloid press by getting Chris Brown to accept his $10 million offer to fight Drake over Rihanna.

He launched FilmOn three years ago before being slapped with a lawsuit by the major TV networks. In November 2010, a judge issued a preliminary injunction against FilmOn, though it wasn't on the merits of broadcasters' arguments over copyright infringement and irreparable harm but rather because, at that time, he had failed to properly respond in court. The lawsuit was then answered and remains pending, with hardly any action in the case in the past six months. Now, the dispute is ready to explode.

On Tuesday, David and the broadcast networks executed a 26-page settlement agreement. The parties stipulated to a consent judgment and permanent injunction. FilmOn also agreed to pay the networks a $1.6 million sum to resolve the case.

But the dispute hardly seems over.

That's because David, who also is suing CBS for distributing Limewire and other P2P software, says he intends to go forward with FilmOn.

"We had established the 'Aereo model' three years ago, which essentially makes a private connection with a personal antenna so it is not a public performance," he says.

And how about the permanent injunction?

On one hand, David acknowledges the settlement, saying, "I believe I could have hunkered down and went to war and beat them on many different levels."

But on the other, he says his service is more akin to Aereo than "what the networks sued us for in first place" and thus believes the settlement doesn't preclude his FilmOn service. In fact, he states his intention to add the networks back to his subscription-based service. He intends to pay retransmission fees to the networks "despite the fact that under the current Aereo ruling we are not required to do so," but the fees will be guided by his view of what they are entitled to receive.

The broadcasters aren't OK with that arrangement, THR hears. The settlement deal gives them the right to sue for breach and enforcement. Violation of the consent judgment incurs penalties and contempt of court. The settlement restrains him from "streaming," and even though David believes that's not what FilmOn/Aereo does in the technical sense, the broadcasters likely will challenge that assessment swiftly and mercilessly.

David also is making another interesting move. He is planning a new TV channel that won't be streamed but will be carried over the air through cable and satellite providers. He says he's reached a deal with KHIZ (channel 64) in Los Angeles and that "FilmOn TV" also will be carried locally by Time Warner, Dish and DirecTV. He says it will be available throughout the U.S. by the end of the year as well as internationally.

As for the nature of the new network, David hasn't revealed much, but he is looking to emulate one role model.

"The irony is that FilmOn TV will be reminiscent of Fox when Barry Diller first launched it in 1986," he says. "The distinct difference is that FilmOn as the 'new network' is taking its place ahead of all the others with ingenuity, innovation and a labor of love for entertainment."

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