Guilty Pleas for Operators of Biggest Illegal Movie/TV Show Streaming Service in the U.S.

Two computer programmers in Las Vegas have pleaded guilty to multiple criminal copyright and money laundering charges related to operating one of the biggest illegal television show and movie streaming services in the United States.

The shuttered services iStreamItAll and Jetflix combined had more content than Netflix, Amazon Prime Video or Hulu, according to the U.S. Department of Justice, which made the announcement on Dec. 13.

Darryl Julius Polo, a.k.a. djppimp, 36, pleaded guilty in the U.S. District Court for the Eastern District of Virginia to one count of conspiracy to commit criminal copyright infringement, one count of criminal copyright infringement by distributing a copyrighted work being prepared for commercial distribution, one count of copyright infringement by reproduction or distribution, one count of copyright infringement by public performance and one count of money laundering.

Subscribe HERE to the FREE Media Play News Daily Newsletter!

In a separate proceeding today, co-defendant Luis Angel Villarino, 40, pleaded guilty to one count of conspiracy to commit copyright infringement.

Sentencing for both defendants is set for next March.

iStreamItAll (ISIA) permitted users to stream and download copyrighted television programs and movies without the permission of the relevant copyright owners.

Defendant Polo admitted that he reproduced tens of thousands of copyrighted television episodes and movies without authorization, and streamed and distributed the infringing programs to thousands of paid subscribers located throughout the U.S.

Follow us on Instagram

Specifically, Polo admitted ISIA offered more than 118,479 different television episodes and 10,980 individual movies. Polo sent out emails to potential subscribers highlighting ISIA’s huge catalog of works and urging them to cancel those licensed services and subscribe to ISIA instead.

According to the DOJ, Polo obtained infringing television programs and movies from pirate sites around the world — including some of the world’s biggest torrent and Usenet NZB sites specializing in infringing content — using various automated computer scripts that ran 24 hours a day, seven days a week.

Specifically, Polo used sophisticated computer programming to scour global pirate sites for new illegal content; to download, process, and store these works; and then make the shows and movies available on servers in Canada to ISIA subscribers for streaming and downloading.

Polo also admitted to running several other piracy services, including a Usenet NZB indexing site called SmackDownOnYou — earning more than $1 million from his piracy operations.

Other defendants in the case are scheduled to go to trial starting on Feb. 3, 2020.

DOJ Files Motion to End Paramount Consent Decrees

As expected, the Department of Justice formally filed a motion in the District Court for the Southern District of New York to terminate the Paramount Consent Decrees, which for more than 70 years regulated how certain movie studios distribute films to movie theatres.

As part of the DOJ’s review of nearly 1,300 legacy antitrust judgments, the antitrust division Nov. 22 announced that after a thorough review, including a 60-day public comment period, it had determined that the Paramount decrees have served their original remedial purposes and no longer serve to promote or protect competition and innovation.

“The Paramount decrees long ago ended the horizontal conspiracy among movie companies in the 1930s and ‘40s and undid the effects of that conspiracy on the marketplace,” Makan Delrahim, assistant attorney general of the Justice Department’s antitrust division, said in a statement.

Subscribe HERE to the FREE Media Play News Daily Newsletter!

The Justice Department’s motion to end the Paramount decrees would allow a two-year transition period for block-booking and circuit dealing to allow the theatre and motion picture industry to have an orderly transition to the new licensing changes.

The bulk of domestic exhibition business is currently controlled by AMC Theatres, Regal Entertainment and Cinemark Holdings.

In 1938, the federal government filed an antitrust lawsuit against several major motion picture companies alleging that those companies had engaged in an industry-wide conspiracy to control the motion picture distribution and exhibition markets.

After several years of litigation, including a 1948 Supreme Court decision in United States v. Paramount, the government and the defendants entered into a series of consent decrees, collectively called the Paramount decrees.

These decrees required the movie studios to separate their distribution operations from their exhibition businesses. They also banned various motion picture distribution practices, including block booking (bundling multiple films into one theatre license), circuit dealing (entering into one license that covered all theatres in a theatre circuit), resale price maintenance (setting minimum prices on movie tickets), and granting overbroad clearances (exclusive film licenses for specific geographic areas).

The Paramount decrees, like other legacy antitrust judgments, have no sunset provisions or termination dates. They continue to govern how the film industry conducts its business, despite significant changes to the industry, including technological innovations, new movie platforms, new competitors and business models, and shifting consumer demand.

Unlike 70 years ago, the first-run movie palaces of the 1930s and ‘40s that had one screen and showed one movie at a time have been replaced by multiplex theatres that have multiple screens showing movies from many different distributors at the same time. New technology has created many different movie platforms that did not exist when the decrees were entered into, including cable and broadcast television, DVDs, and the Internet through movie streaming and download services.

“The [government] has concluded that these decrees have served their purpose, and their continued existence may actually harm American consumers by standing in the way of innovative business models for the exhibition of America’s great creative films,” Delrahim said.

 

DOJ Looking to End 1940s-Era Theatrical Movie Distribution Rules

The Department of Justice’s antitrust division is considering ending 1940s-era legislation that prohibits studios from owning movie theaters and controlling the exhibitor release slate, among other provisions.

Known as the Paramount decrees, antitrust efforts at the time led to the 1948 U.S. Supreme Court ruling against Paramount Pictures and other major studios that ended studio ownership of theaters and made it illegal for studios to mandate theaters screen all or none of their new releases, a practice known as “block booking.”

“As the movie industry goes through more changes with technological innovation, with new streaming businesses and new business models, it is our hope that the termination of the Paramount decrees clears the way for consumer-friendly innovation,” Makan Delrahim, the DOJ’s antitrust boss, Nov. 18 told the American Bar Association confab in Washington, D.C.

Delrahim led the Justice Department’s unsuccessful appeal of AT&T’s $85 billion acquisition of Time Warner, which led to the creation of WarnerMedia.

Subscribe HERE to the FREE Media Play News Daily Newsletter!

The DOJ, which would have to file a legal court motion to reverse the law, is seeking a two-year sunset period on several elements of the decrees, including block booking and select license agreements, according to The Wall Street Journal, which first reported the government move.

Observers contend the move could expedite consolidation among the three largest theatrical chains: AMC Theatres, Regal Entertainment and Landmark Holdings, while likely putting smaller exhibitors out of business.

The theatrical business remains under siege by over-the-top video and market domination by Disney, which continues to rule the box office through its Marvel Studios, Pixar Animation and Lucasfilm releases.

Trade group the National Association of Theater Operators suggested a reversal of existing theatrical distribution rules would enable major studios to dominate exhibitor release slates.

“If exhibitors were forced to book out the vast majority of their screens on major studio films for most of the year, this would leave little to no room for important films from smaller studios,” NATO said in a statement.

DOJ Drawn Into Comcast, Starz Carriage Dispute

With legacy pay-TV under siege from cord-cutting subscribers and high-profile alternatives such as Netflix, Amazon Prime Video, Hulu and now Apple TV+, the status quo for traditional carriage agreements has gone out the window.

And so it was that Comcast last month quietly announced it would soon end Xfinity subscriber access to Starz, the premium movie and TV service it acquired in 2016 for $4.4 billion.

The news was significant since Comcast represents about a third of Starz’ 24.4 million subscribers. Starz, which operates its own branded $8.99 monthly subscription streaming service, has been a profit vehicle for Santa Monica, Calif.-based Lionsgate.

Comcast reported it will replace Starz on Dec. 10  with Epix, the premium service owned by MGM and formerly Lionsgate, unless a new agreement can be reached. The news has contributed to a 9% drop in Lionsgate’s stock valuation — which is already down nearly 50% in the fiscal year.

Subscribe HERE to the FREE Media Play News Daily Newsletter!

The negotiation impasse has reportedly caught the attention of the Department of Justice, which continues to have Comcast in its crosshairs ever since its acquisition of NBC Universal in 2009. Back then, regulators forced the cable giant to relinquish management input on its stake in Hulu, citing antitrust issues.

Earlier this year Comcast sold its Hulu stake to Disney after acquiring Sky satellite TV operator in the United Kingdom.

Comcast’s NBC Universal unit is readying its own SVOD service, Peacock, early next year.

The situation prompted Senators Dianne Feinstein (D-CA) and Susan Collins (R-ME) to contact Assistant Attorney General Makan Delrahim to investigate the situation. Delrahim played a significant role in the DOJ’s failed attempt to stop AT&T’s acquisition of Time Warner.

“These changes could lessen competition in the video programming market and limit choices for many thousands of consumers in Maine and millions more across the nation,” Collins wrote in a letter to Delrahim as reported by CNBC.

“I encourage both of you to seek a win-win solution and consider all options to keep Starz programming on the air,” Feinstein wrote in a separate letter.

Comcast is employing strategy out of Dish Networks’ playbook, which typically includes threats to halt access to third-party content distribution for more favorable distribution terms. Indeed, Dish currently has HBO blacked out to it subscribers.

Comcast, like Dish, contends its subs can access services such as Starz and HBO independently, thus negating what it considers to be excessive carriage fees.

“At the end of the day, this is a routine commercial negotiation that raises no conceivable antitrust concerns,” Comcast said in a statement.

Starz countered that Comcast is forcing its subs to pay more for its service.

“By unilaterally taking Starz out of its packages with no refund … Comcast is unfairly depriving them of relatable programming that reflects their cultural experience,” read a Starz statement.

Lionsgate reports third-quarter (ended Sept. 30) financial results Nov. 7.

 

AT&T Reportedly Considering Spinning Off DirecTV or Merging Unit With Dish Network

Facing mounting mergers-and-acquisition debt, criticism from an activist investor and changing consumer habits toward pay-TV, AT&T is reportedly considering spinning off its DirecTV subsidiary or combining it with competitor Dish Network.

The Wall Street Journal, citing sources familiar with the situation, said CEO Randall Stephenson is exploring the option despite telling an investor event this week he still the supports the satellite TV business AT&T acquired in 2015 for $49 billion.

While nothing could come of the situation, Dish co-founder/CEO Charles Ergen Sept. 17 told the same investor group he welcomes merging the two satellite providers. Ergen tried pursuing DirecTV in 2014, but lost out to AT&T.

Subscribe HERE to the FREE Media Play News Daily Newsletter!

Indeed, with 12 million subscribers — largely buttressed by standalone online TV service Sling TV — Dish would benefit from consolidation. AT&T has projected it would lose more than 1.4 million satellite subs in 2019, including rebranded DirecTV Now (AT&T TV) online subs.

However, when the former parents of Dish and DirecTV considered merging in 2001, federal regulators quashed the idea on antitrust issues.

The Trump Administration is still licking it wounds from a failed attempt to block AT&T’s acquisition of Time Warner — a move some observers contend was largely based on politics involving the president’s dislike of Time Warner subsidiary CNN.

How that would impact a Dish/DirecTV combination is anyone’s guess.

“From a regulatory perspective, it hasn’t been successful and I don’t know that there is any change in that regulatory perspective,” AT&T CFO John Stephens said recently. “I understand the industrial logic, but quite frankly it’s been tried and has been rejected.”

DOJ Puts Oscars on Notice Regarding Streaming Video

The Justice Department reportedly has contacted the Academy of Motion Pictures Arts and Sciences — the organization that runs the Academy Awards — about potential new rules that would restrict original movies distributed via streaming video channels (i.e. Netflix) from awards consideration.

First reported by Variety, DOJ antitrust boss Makan Delrahim March 21 sent a letter to Academy CEO Dawn Hudson saying any new rules put in place to restrict streaming video services from consideration could be viewed as anticompetitive.

Subscribe HERE for FREE Daily Newsletter!

“In the event that the academy — an association that includes multiple competitors in its membership — establishes certain eligibility requirements for the Oscars that eliminate competition without procompetitive justification, such conduct may raise antitrust concerns,” Delrahim wrote, as reported by Variety.

At issue are select original movies from Netflix, which the streaming pioneer submits for awards (including Best Picture) without a traditional 90-day theatrical release.

Netflix’s Roma was nominated for 10 Academy Awards, winning three, including Best Director, but losing Best Picture to Green Book.

The Oscar organization, in a media statement, confirmed receiving correspondence from the DOJ and responding accordingly.

“The Academy’s Board of Governors will meet on April 23 for its annual awards rules meeting, where all branches submit possible updates for consideration,” a representative from the Academy said in a media statement.

Delrahim previously tried unsuccessfully to quash AT&T’s $85 billion acquisition of Time Warner, which led to the formation of WarnerMedia.

 

 

 

 

 

Appeals Court Denies DOJ Bid to Block AT&T’s $85 Billion Time Warner Purchase

A federal appeals court Feb. 26 ruled against the Justice Department’s attempt to block AT&T’s $85 billion acquisition of Time Warner, which led to the formation of WarnerMedia.

The court found that a lower court judge’s decision last summer approving of the transaction did not violate antitrust guidelines.

“The judgment of the district court appealed from this cause is hereby affirmed,” the court wrote in its ruling.

The Justice Department had argued that the merger would enable AT&T, which also owns DirecTV, to leverage its stake in the satellite operator to force pay-TV competitors to pay more for content from Warner Bros., HBO and Turner, which includes CNN.

Some observers speculated the government’s attempt to block the deal revolved more around President Trump’s openly hostile approach to CNN, which he has labeled “fake news,” and, along with other media outlets not named Fox News, an “enemy of the people.”

Indeed, the DOJ’s legal challenges represented the first to a corporate vertical merger in four years.

 

Nexstar Media Group Acquires Tribune Media Company for $6.4 Billion

Nexstar Media Group Dec. 3 announced it has entered into a definitive merger agreement with Tribune Media Company to acquire all outstanding shares of Tribune Media in a cash deal valued at $6.4 billion, including the assumption of Tribune Media’s outstanding ($2.3 billion) debt.

The transaction makes Irving, Texas-based Nexstar the largest local TV station owner in the country, including 216 stations in 118 markets – reaching approximately 39% of U.S. television households. Tribune also owns 31% stake in Food Network.

The combined entity will be one of the nation’s leading providers of local news, entertainment, sports, lifestyle and network programming through its broadcast and digital media platforms with annual revenue of approximately $4.6 billion.

Notable Tribune stations include WGN America in Chicago and KTLA in Los Angeles. WGN became one of the first local broadcasters to ink production deals for original (now cancelled) series, including “Salem” from 20thCentury Fox, “Manhattan” (Lionsgate), and “Underground” (Sony Pictures), among others.

The deal is expected to close by the third-quarter next year following regulatory approvals.

“Nexstar has long viewed the acquisition of Tribune Media as a strategically, financially and operationally compelling opportunity that brings immediate value to shareholders of both companies,” Perry Sook, CEO of Nexstar, said in a statement.

Sook said the transaction offers synergies ($160 million in the first year) related to the enhanced scale of the combined broadcast and digital media operations and increases the company’s audience reach by about 50%.

The deal follows the scuttled $3.9 billion merger attempt between Tribune and Sinclair Broadcasting Group, which imploded following allegations the politically conservative Sinclair would have positioned Tribune stations as far-right partisan mouthpieces.

The new transaction reflects a 15.5% premium for Tribune Media shareholders and a 45% premium to Tribune’s closing price on July 16, the day FCC Ajit Pai issued a statement regarding his intention to hold a hearing on the Sinclair offer.

The Nexstar/Tribune deal faces its own regulatory hurdles under the current FCC and Department of Justice, which together under the direction of the Trump Administration, have taken stronger approaches toward media mergers as seen in the DOJ’s ongoing appeal of the AT&T/Time Warner pact.

Indeed, Nexstar said it intends to divest certain TV stations necessary to comply with regulatory ownership limits and may also divest other assets it deems to be non-core.

 

 

WarnerMedia OTT Video Platform to Offer Three Service Tiers

WarnerMedia’s much-anticipated over-the top video platform launching in the fourth quarter of 2019 will include three levels of service: an entry-level movie-focused package; a premium service with original programming and theatrical movies; and a third service that bundles content from the first two plus an extensive library of Warner Bros., HBO and Turner programming and licensed content.

Speaking Nov. 29 at the telecom’s analyst day event in New York, CEO John Stankey, CEO of WarnerMedia said the company’s unnamed/unpriced SVOD service would complement existing business (i.e. HBO Now with 5 million subscribers); benefit current distribution partners; expand the audience and increase engagement around content; and provide data and analytics to inform new products and better monetize content.

Stankey said the SVOD service would be a combination of original content, movies, TV shows, library fare and third-party programming.

“It’s a software experience wrapping creative excellence, that we’re going to showcase specific brands … to help the consumer find the right kind of curated content they want,” he said. “It’s gotta be a great value proposition.”

Separately, CEO Randall Stephenson said the merger with Time Warner continues to take a lot of time …”Unfortunately, a lot of it involve[s] litigation with the government.”

The CEO was referring to the Justice Department’s decision to appeal an unfavorable federal judge’s antitrust decision approving AT&T’s $85 billion acquisition of Time Warner.

The U.S. District Court of Appeals in the District of Columbia is expected to rule early next year.

“We are well positioned for success as the lines between entertainment and communications continue to blur,” said Stephenson. “If you’re a media company, you can no longer rely exclusively on wholesale distribution models. You must develop a direct relationship with your viewers. And if you’re a communications company, you can no longer rely exclusively on oversized bundles of content.”

Indeed, AT&T’s core DirecTV pay-TV service suffered through one of its worst fiscal quarters, losing nearly 350,000 subscribers. The losses were offset to a degree by DirecTV Now, the standalone SVOD service with about 1.8 million subs.

AT&T warned that elimination of promotional pricing at DirecTV Now would likely result in negative net sub adds in the fourth quarter of 2018 and in 2019.

WarnerMedia Alleges Politics in Dish Network Dispute

WarnerMedia is accusing the Department of Justice of using a carriage disagreement with Dish Network as leverage in its appeal of a federal judge’s favorable verdict in AT&T’s $85 billion acquisition of Time Warner.

AT&T’s WarnerMedia — which includes HBO, Turner and Warner Bros. — for the first time (Nov. 1) pulled HBO and Cinemax from Dish Network after it claimed the satellite operator refused to negotiate. The move reportedly affected about 2.5 million of Dish’s 13 million pay-TV subscribers.

“Dish’s proposals and actions made it clear they never intended to seriously negotiate an agreement,” Simon Sutton, HBO president and chief revenue officer, said in a statement as reported by Reuters.

While carriage disagreements and negotiations aren’t uncommon, the AT&T/Time Warner merger is different. The deal has been entangled in partisan politics since the election of President Donald Trump.

Trump’s ongoing characterizations of certain media outlets — notably Turner’s CNN — as fake news and biased against him has prompted allegations the Justice Department’s last-minute objection to the merger was more about politics than antitrust issues.

The DOJ contends AT&T has too much power owning and controlling major content creators and distribution channels — leverage it claims hurts consumers. The carriage dispute, says the government, offers a blueprint example of that.

“This behavior, unfortunately, is consistent with what the Department of Justice predicted would result from the merger,” said a DOJ representative. “We are hopeful the Court of Appeals will correct the errors of the District Court.”

WarnerMedia says Dish is using the current political environment to extract more favorable contract terms. Indeed, it alleges Dish is collaborating with DOJ on the issue.

“That collaboration continues to this day with Dish’s tactical decision to drop HBO — not the other way around,” said a WarnerMedia rep. “DOJ failed to prove its claims about HBO at trial and then abandoned them on appeal.”

Andy LeCuyer, SVP pf programming at Dish, argues otherwise.

“It seems AT&T is implementing a new strategy to shut off its recently acquired content from other distributors,” he said.