Legally Challenged Locast Streaming Service Shutters

Locast, the controversial online platform that attempted to stream third-party over-the-air TV network channels free to more than 3 million U.S. users across 13 cities, including Chicago, Los Angeles, New York, San Francisco and Washington, D.C., has ceased operations.

The decision came after a New York judge sided with major media companies Disney, Fox and NBCUniversal, ruling that unauthorized use of their broadcast channels was illegal. Locast argued that as a nonprofit it was immune to copyright laws and merely acting as a “signal booster.”

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The judge disagreed, contending that donation requests from Locast to expand into additional markets voided the company’s nonprofit status.

“Locast was designed from the very beginning to operate in accordance with the strict letter of the law, but in response to the court’s recent rulings, with which we respectfully disagree, we are hereby suspending operations, effective immediately,” the nonprofit said in a statement.

Unique to Locast was that it had received funding from major media companies such as AT&T ($500,000), which owns WarnerMedia, and Google’s YouTube. When AT&T’s DirecTV satellite distributor and U-verse pay-TV channel had a retransmissions fee dispute with ViacomCBS in 2019, it directed its 6.5 million subscribers blacked out from CBS content to use Locast.

Separately, Dish Network offered the Locast app to its satellite and Sling TV subs as an alternative on its AirTV devices.

Former Netflix Executive Convicted on Bribery, Money Laundering Charges

Former Netflix executive Michael Kail April 30 was found guilty by a federal jury on 29 counts of money laundering, fraud, bribery and illegal kickbacks during his employment at the SVOD pioneer between 2011 and 2014. The unanimous verdict following a one-week trial was handed down by 12 jurors in San Jose, Calif.

Michael Kail

The 52-year-old Kail, who was VP of internet technology at Netflix from 2011 to 2014, was indicted in 2018 for allegedly accepting kickbacks valued at almost $700,000 ranging from stock options, cash and gifts from myriad technology companies doing business with Netflix. Kail justified the proceeds as commissions, which he then used for personal gains, including allegedly purchasing a house in Los Gatos, Calif.

Kail, who is free on bail, faces a possible sentence of 20 years and fines totaling more than $1 million, or twice the gross loss to Netflix. The streamer filed a separate civil lawsuit against Kail in 2014. That case was settled confidentially in 2015.

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After leaving Netflix, Kail joined Yahoo as chief information officer, a position he vacated after the federal lawsuit filing. He then co-founded a cyber security firm in Boston called Cybric, where according to his LinkedIn profile he served as chief technology officer (CTO) from October 2015 to May 2018. The company is now known as ZeroNorth.

His most recent job, according to LinkedIn, was CTO of Everest, a San Diego-based company that describes itself as “a decentralized platform and protocol to build value exchanges between people and organizations. Based upon the blockchain and Ethereum smart-contract technology – Everest makes tools for institutions to deliver value to communities. Everest’s solution brings together a massively scaleable transaction platform, EverChain, with currency and document storage, EverWallet, and biometrically verified identities, EverID.”

His LinkedIn profile shows a departure date of May 2021.

 

Netflix Indicted by Texas Grand Jury for ‘Cuties’ Movie

A Texas grand jury has indicted Netflix on a single felony charge: “promotion of lewd visual material depicting a child” regarding the French-language coming-of-age movie Cuties.

The movie, about an 11-year-old girl from Senegal who joins a dance troupe to escape an overbearing mother, has generated a firestorm of controversy for the SVOD pioneer regarding the film’s initial marketing and content that critics say overtly sexualizes underage girls.

The criminal complaint, filed Sept. 23 in the 1A District Court of Tyler County in the state of Texas, was posted on the social media page of Matt Schaefer, a Republican member of the Texas House of Representatives.

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The complaint, which calls out co-CEOs Ted Sarandos and Reed Hastings, alleges Netflix and management “knowingly promote visual material, which depicts the lewd exhibition of the genitals or pubic area of a clothed or partially clothed child who was younger than 18 years of age at the time the visual material was created, which appeals to the prurient interest in sex, and has no serious literary, artistic, political or scientific value.”

The complaint alleges the movie’s values act against “the peace and dignity of the state” of Texas.

In a statement, Netflix said Cuties is a social commentary against the sexualization of young children — a point of view shared by the film’s director Maïmouna Doucoure.

“This charge is without merit and we stand by the film,” said the streamer.

Dish Announces ‘Anticompetitive’ AT&T Has Pulled HBO and Cinemax From Its Services

Dish late Oct. 31 announced that AT&T had pulled HBO and Cinemax content from Dish and Sling TV subscribers, calling the move “anticompetitive.”

The Dish release states that the “AT&T-DirecTV-Time Warner mega merger has allowed the giant conglomerate to relentlessly exert power and influence over competing pay-TV providers and consumers.”

Dish announced the action came after AT&T made “untenable demands designed specifically to harm customers, particularly those in rural areas, as well as damage competing pay-TV providers.”

The U.S. Department of Justice filed an antitrust lawsuit to block the AT&T-Time Warner lawsuit and Aug. 6 appealed the court’s decision to allow the merger. Following the merger’s approval, subsidiary WarnerMedia announced plans for a subscription streaming service.

“There were no guidelines set in place to ensure that AT&T ‘played fair’ for HBO and Cinemax subscribers, regardless of their pay-TV provider,” according to Dish.

“Plain and simple, the merger created for AT&T immense power over consumers,” said Andy LeCuyer, Dish SVP of programming, in a statement. “It seems AT&T is implementing a new strategy to shut off its recently acquired content from other distributors. This may be the first of many HBO blackouts for consumers across the country. AT&T no longer has incentive to come to an agreement on behalf of consumer choice; instead, it’s been given the power to grab more money or steal away customers.”

The blackout “is exceptionally harmful to rural Americans who don’t have the same broadband access as customers living in large cities,” according to a Dish release. “Customers with sufficient internet service can substitute HBO Now, the direct-to-consumer streaming offering from HBO. The majority of DISH’s HBO subscriber base is located in rural areas with limited broadband access and likely won’t be able to watch HBO or Cinemax without a satellite connection,” the release stated.

“AT&T’s actions are a deliberate slap in the face to rural Americans,” said LeCuyer in a statement. “And furthermore, they are anticompetitive. AT&T, a company worth more than $200 billion, is intentionally punishing those who don’t have big-city broadband access, in an attempt to push customers to the only other satellite provider, its own DirecTV.”

AT&T is demanding Dish pay for a guaranteed number of subscribers, regardless of how many consumers actually want to subscribe to HBO, according to Dish.

“AT&T is stacking the deck with free-for-life offerings to wireless customers and slashed prices on streaming services, effectively trying to force Dish to subsidize HBO on AT&T’s platforms,” said LeCuyer in a statement. “This is the exact anticompetitive behavior that critics of the AT&T-Time Warner merger warned us about. Every pay-TV company should be concerned.”

“Dish would welcome binding, baseball-style arbitration to determine the fair market value of HBO and Cinemax,” the Dish release states. “During the arbitration process, AT&T would be required to restore its channels to Dish customers.”

“Rather than trying to force consumers onto their platforms, we suggest that AT&T try to achieve its financial goals through simple economics: if consumers want your product, they’ll pay for it. We hope AT&T will reconsider its demands and help us reach a swift, fair resolution,” said LeCuyer in a statement.

Dish and eligible Sling TV customers will be credited on their bill for time they do not receive HBO or Cinemax, Dish announced, adding the company is also offering customers a free preview of HDNET Movies.

Barnes & Noble Fires CEO for Cause

Barnes & Noble July 3 announced that its board has fired CEO Demos Parneros for violations of undisclosed company policies. The national bookseller said the action was taken under advisement by the law firm Paul, Weiss, Rifkind, Wharton & Garrison LLP.

The chain said Parneros’ termination was not due to any disagreement regarding its financial reporting, policies or practices or any potential fraud relating thereto. Parneros will not receive any severance payment and he is no longer a member of the board.

In meantime, Barnes & Noble has appointed a leadership group to share the duties of the office of the CEO until a new leader is named. They include CFO Allen Lindstrom, Tim Mantel, chief merchandising officer and Carl Hauch, VP, stores. Leonard Riggio remains executive chairman and will be involved in its management.

The bookseller, which is dealing with changing consumer habits toward book purchases and digital entertainment, said it would begin an executive search for a new CEO and that no changes in its goals or objectives are planned. Additionally, Barnes & Noble affirms its previously announced pre-tax guidance of $175 million to $200 million for fiscal 2019.