What Legal Battles? Video Upstart Aereo Lands $34M In New Funding, Plans Big U.S. Expansion

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Streaming TV startup Aereo generated quite a few headlines last year. Backed by Barry Diller and IAC, the controversial young company has become entangled in a lengthy and expensive legal battle with the major network broadcasters who want to see it shut down — a battle that’s now headed to the Supreme Court.

While the startup has been growing fast and announced big expansion plans early last year as a result — in which it expected to be in 22 new markets by the end of 2013 — the legal battles have slowed Aereo’s nationwide expansion. However, today Aereo looks to be turning that around with a big round of new capital to fuel these efforts, as the New York City-based company announced that it has closed $34 million in Series C financing.

The new round, in which the company’s lead investor, IAC, was joined by media investor honchos like Gordon Crawford and Himalaya Capital Management, will support Aereo’s “rapid nationwide expansion” and allow it to ramp up hiring, the company said. Previous investors Highland Capital Partners, FirstMark Capital also joined in the round.

When my colleague Jordan Crook sat down with Chet Kanojia in December, the Aereo founder and CEO was eager to have the case move ahead to the Supreme Court and remained confident that Aereo is operating within the law. While that may sound like entrepreneurial delusion or hubris, the founder has reason to be confident.

Up to this point, while broadcasters have slapped it with injunctions and moved to hamstring the startup with legal shackles, the company already has two verdicts in its favor. For Kanojia, Supreme Court certification would finally eliminate any questions as to the legality and legitimacy of Aereo’s business — at least for the time being. A vote in its favor at the federal level could also make the obstacle presented by its clone, FilmOn, disappear as well.

As to when a decision will be made by the Supreme Court? The rumor is that the Supreme Court could take up the issue as early as Friday, January 10th, the scheduled date for their next court conference. At that point, it may also become a bit more clear what the expected timeline will be for its decision.

Regardless, a year from launch, Aereo has more than a little skin in the game already, having raised just under $100 million to date, some of which has likely been put towards its legal battles. In his conversation with Jordan last month, the Aereo CEO admitted that the ongoing lawsuits have been not only expensive, but more than a little distracting.

To that point, while Aereo pledged that its expansion would see it arrive in 22 new markets by the end of 2013, the legal battles have slowed that progress significantly. When January 1st rolled around, Aereo had managed only half of that pledge and is currently operating in 10 cities.

Not to mention the fact that legal wrangles haven’t been Aereo’s only obstacle, as the startup has also encountered technical difficulties in moving its predominantly indoor technology out of doors — to rooftops in new markets. Not only that, but it’s had to wait for the “outdoor-friendly technology” to get regulatory approval as well, as Jordan wrote at the time.

Nonetheless, the company remains optimistic, and with its new capital in tow, Aereo plans to be in five new markets by the end of the first quarter of 2014. Amidst the escalating wars in court, the startup has managed to scale quickly over the last year, launching its first Android app last year (the app is currently in beta) and doubling its headcount, Kanojia said today.

As for it’s existing scope, Aereo is currently operating its cloud-based antenna and DVR technology in New York City, Boston, Atlanta, Miami, Salt Lake City, Houston, Dallas, Denver, Detroit and Baltimore and offers memberships starting at $8/month for access to the antenna, with 20 hours of DVR storage.

The company will be making a full presentation about the news at the Citi Global Internet, Media & Telecommunications Conference tomorrow morning. Readers can find the live stream of the event here.

We’ve reached out to the company to learn more, and will be updating the post in the meantime.