High Noon for Diller's Aereo

When Barry Diller backed a start-up that streams local broadcast signals over the Internet, it looked like another unorthodox move by a famously offbeat mogul. Now that start-up has become a grenade that is threatening to wound the television industry.

Major TV networks' legal efforts to shut down the service, called Aereo, will be tested in federal court next week. Lawyers not involved in the case say the company has a decent argument, based on legal precedents set in prior media industry lawsuits. The TV industry is closely watching how the case plays out, particularly because Aereo doesn't share any of the fees it collects with broadcasters, who claim copyright infringement. So, as Time Warner Cable Chief Executive Glenn Britt hinted recently, a victory in court by Aereo could embolden cable and satellite-TV operators to stop paying fees to carry broadcast networks' signal. That revenue has become increasingly vital to broadcasters over the past couple of years, offsetting weak growth in advertising.