FOX TELEVISION STATIONS, INC., et al v. AEREOKILLER LLC, et al

Filing 27

Joint MOTION for Preliminary Injunction by ALLBRITTON COMMUNICATIONS COMPANY, AMERICAN BROADCASTING COMPANIES, INC., CBS BROADCASTING, INC., CBS STUDIOS, DISNEY ENTERPRISES, INC., FOX BROADCASTING COMPANY, INC., FOX TELEVISION STATIONS, INC., GANNETT CO., INC., NBC STUDIOS LLC, NBC SUBSIDIARY (WRC-TV), LLC, OPEN 4 BUSINESS PRODUCTIONS LLC, TELEMUNDO NETWORK GROUP LLC,, TWENTIETH CENTURY FOX FILM CORPORATION, UNIVERSAL NETWORK TELEVISION LLC (Attachments: # 1 Memorandum in Support, # 2 Appendix, # 3 Declaration of Julie Shepard, # 4 Declaration of Sherry Brennan, # 5 Declaration of Samuel Bahun Part 1 of 5, # 6 Declaration of Samuel Bahun Part 2 of 5, # 7 Declaration of Samuel Bahun Part 3 of 5, # 8 Declaration of Samuel Bahun Part 4 of 5, # 9 Declaration of Samuel Bahun Part 5 of 5, # 10 Declaration of Barbara Wall, # 11 Declaration of Carly Seabrook, # 12 Declaration of Daniel Kummer, # 13 Declaration of Marsha Reed, # 14 Declaration of Rebecca Borden, # 15 Declaration of William Lord, # 16 Text of Proposed Order)(Smith, Paul). Added MOTION for Hearing on 8/2/2013 (rdj).

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
-----------------------------------------------x
FOX TELEVISION STATIONS, INC., et al.,
Plaintiffs,
v.

Civil Action No. 13-cv-00758-RMC
Hon. Rosemary M. Collyer

FILMONX, LLC (f/k/a AEREOKILLER LLC,
et al.,
Defendants.
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DECLARATION OF SHERRY BRENNAN IN SUPPORT OF PLAINTIFFS’ MOTION
FOR A PRELIMINARY INJUNCTION

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I, Sherry Brennan, declare as follows:
1.

I am employed by Fox Cable Network Services, LLC as Senior Vice President,

Distribution Strategy & Development. In this position, I consider and develop television content
distribution strategy for various media platforms on behalf of numerous Fox entities including
Fox Television Stations, Inc. and Twentieth Century Fox Film Corporation, two of the plaintiffs
in this action (collectively with the third plaintiff, Fox Broadcasting Company, “Fox”). I make
this declaration based on my personal knowledge and my knowledge of the television industry,
in which I have worked for 24 years.
2.

Fox and other entertainment broadcast companies, including NBC Subsidiary

(WRC-TV) LLC, NBC Studios LLC, Universal Network Television, LLC, Open 4 Business
Productions LLC, Telemundo Network Group LLC, American Broadcasting Companies, Inc.,
Disney Enterprises, Inc., Allbritton Communications Company, CBS Broadcasting Inc., CBS
Studios Inc., and Gannett Co., Inc. (collectively referred to as “Broadcast Companies”), produce,
own and distribute a wide variety of television programming and copyrighted works including,
but not limited to, episodic dramas, comedies, sports and other programs that are broadcast
nationally (“Programs”). Fox’s copyrighted works include popular programs such as Glee, The
Simpsons, and Touch and are broadcast on Fox-affiliated television stations. A non-exhaustive
list identifying representative samples of Fox’s Programs and the relevant copyright registration
numbers (where applicable), along with true and correct copies of the registration certificates
and/or the advance notice of potential infringement, are attached hereto as Exhibit A. I
understand that other declarants have provided the Court with similar non-exhaustive lists of
representative samples of the copyrighted Programs shown on the ABC, CBS and NBC

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television networks, along with their copyright registration numbers, and attached true and
correct copies of the registration certificates.
3.

Certain of the Broadcast Companies own and operate local broadcast television

stations that are actively engaged in the distribution of their Programs in the United States.
Recent reports reflect that nearly 54 million Americans rely on over-the-air broadcasts (not cable
or satellite) to receive television. See the National Association of Broadcaster’s 2012 press
release, a true and correct copy of which is attached hereto as Exhibit B.
4.

In addition to broadcasting Programs directly over the airwaves to local

communities, the Broadcast Companies, through their owned and operated stations, enter into
retransmission consent agreements with various cable television systems, satellite television
services and other multi-channel distributors, such as Time Warner Cable, DirecTV, Comcast
and Verizon, among others, who make the Broadcast Companies’ Programs available to their
subscribers.
5.

The Broadcast Companies are some of the largest producers and buyers of

television content in the United States, producing and acquiring thousands of hours of
programming each year. The Broadcast Companies each spend hundreds of millions of dollars
each year for their content, including sporting events, “reality” shows, scripted live-action and
animated shows. Indeed, primetime shows alone cost the Broadcast Companies anywhere from
hundreds of thousands of dollars to multiple millions of dollars per hour of programming.
Through their television production and distribution businesses, the Broadcast Companies
directly and indirectly employ tens of thousands of people who rely on a vibrant content
production business for their livelihoods. The Broadcast Companies’ ability to continue to offer
over-the-air broadcast programming to the public depends on their ability to realize and monetize

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the value of their programming through distribution on their television networks, selling
advertising, and entering into the various licensing distribution arrangements discussed below.
The Broadcast Companies’ ability to monetize their content, indeed their entire business model,
depends on their ability to control how, when, by whom, for how much, and where Programs
may be distributed.
6.

Defendants FilmOnX, LLC (formerly known as Aereokiller, Inc.), FilmOn.TV

Networks, Inc., FilmOn.TV, Inc., FilmOn.Com, Inc. (collectively, “FilmOnX”) have neither
sought nor obtained a license, or any other form of consent from Fox -- nor, as I am informed,
from any of the Plaintiffs in this case -- to use, stream, retransmit, perform or otherwise exploit
their Programs. Nevertheless, in August 2012, FilmOnX launched an Internet streaming service,
originally available at barrydriller.com and now available on filmon.com, that captures live
broadcast television programming, including Programs from the Broadcast Companies’ local
channels, and retransmits that programming over the Internet to filmon.com viewers and
subscribers. After the Broadcast Companies filed lawsuits against FilmOnX in the Central
District of California, FilmOnX also deployed applications (often referred to as “apps”)
compatible with iPhones, Android Phones, Microsoft’s Windows 8 and Facebook that, like
filmon.com, stream the Broadcast Companies’ local channels to Defendants’ users without the
Broadcast Companies’ authorization. I personally viewed Fox’s local programming streaming
on FilmOnX’s unlicensed Internet service in Los Angeles before FilmOnX was enjoined by the
Honorable George Wu from retransmitting the Broadcast Companies’ local channels within the
Ninth Circuit.
7.

Despite being enjoined in the Ninth Circuit, FilmOnX continues to capture live

broadcast television programming, including Programs from the Broadcast Companies’ local

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channels, in cities outside the Ninth Circuit and retransmits that programming over the Internet
via filmon.com and various web applications to filmon.com viewers and subscribers.
8.

FilmOnX’s unauthorized service, if allowed to continue, will injure the Broadcast

Companies’ businesses in multiple ways. The extent of the injury that the Broadcast Companies
will suffer is of a nature that is inherently and practically very difficult to measure. These
categories of harm are discussed below.
9.

The first category involves the multiple ways that FilmOnX’s unlicensed service

harms the Broadcast Companies’ ability to negotiate with television advertisers and the
additional damage that flows therefrom. A major source of the Broadcast Companies’ revenues
is derived from advertising that appears during broadcasts and programming. And, it is due in
large part to advertising that millions of Americans are able to access such free broadcast
television provided by the Broadcast Companies.
10.

The value of advertising is dependent upon program viewership. Advertisers rely

on accepted industry research and data that measure the number of viewers who actually view
the commercials during a particular program (sometimes called the number of “impressions”).
The traditional method to measure television viewership and impressions, and more
significantly, the only measure universally accepted by advertisers, are the metrics compiled by
The Nielsen Company (“Nielsen”). The most influential commercial viewership and
impressions rating is the “C3” rating generated by Nielsen. C3 quantifies the average number of
commercials viewed during a particular program when it airs on standard television and for the
next three days (in order to capture data from viewers who watch the program later on their
DVRs). Due to advertisers’ reliance on Nielsen’s C3 metric, it is essentially the currency by
which advertising sales are made.

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11.

Viewers who watch the Broadcast Companies’ Programs using FilmOnX’s

service are not included in Nielsen’s C3 measurement metrics used for advertising sales. As a
result, FilmOnX’s unauthorized exploitation of the Broadcast Companies’ Programs necessarily
results in an undercount of the Broadcast Companies’ viewership, which in turn adversely affects
the amounts advertisers will pay to the Broadcast Companies.
12.

FilmOnX’s adverse impact on the value of the Broadcast Companies’ advertising

revenue due to viewers watching the Broadcast Companies’ Programs using FilmOnX’s service
also extends to their video-on-demand (“VOD”) services. The Broadcast Companies separately
license to cable, satellite and telco service providers the right to offer subscribers access to a
library of previously-aired television programs for immediate, “on demand” viewing on standard
television. Such VOD services are distributed after a short window following a program’s
original air date and time (often the day after a program first airs). The VOD services deliver the
Programs with their full complement of C3 advertising. And, in many instances, the Broadcast
Companies require that the providers disable the fast-forward functionality during commercials
when a subscriber watches a Program on VOD. Among other things, this bolsters the Broadcast
Companies’ ability to earn revenue from the sale of commercials.1 FilmOnX harms the
Broadcast Companies’ revenue-generating ability from VOD offerings because viewers who
watch the Broadcast Companies’ Programs on FilmOnX’s service are unlikely to use VOD
services. And, as noted before, FilmOnX viewers are not counted in Nielsen’s C3 metrics.

1

Generally, the set of commercials featured in Fox’s Programs for the initial air
date are swapped out and replaced with a new set of commercials after three days
(i.e., after the C3 ratings window). It is my understanding that other Broadcast
Companies pursue similar practices.

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13.

Further, in advertising negotiations, the value of television advertising is derived

not only from the size of the audience, but also based upon the demographic profile of the
audience. Having additional viewers in desirable demographic categories yields greater
advertising revenue for content owners such as Fox. Because Nielsen is relied upon by
advertisers in the United States to ascertain a TV show’s demographic profile, and because
Nielsen does not include in its C3 metrics the number or the demographics of web-based
viewing, FilmOnX’s unauthorized misappropriation of the Broadcast Companies’ Programs
undermines the Broadcast Companies’ efforts to ascertain an accurate demographic profile of its
audience. This in turn adversely affects the Broadcast Companies’ ability to obtain additional
revenue from advertisers based upon the demographic profile of its viewers using the C3 metric
or any other metric to sell linear TV advertising. And, while Nielsen has announced plans to
conduct some measurements of some forms of viewing television over the Internet in the future,
Nielsen’s online metrics (such as extended screen) do not include many popular devices (e.g.,
iPads), do not measure workplace viewing which we estimate currently makes up more than 20%
of Internet viewership based on Comscore and other industry Internet measurement metrics, and
require expensive tagging of commercials in order to be able to measure them. Moreover,
industry experts are at best divided on the potential efficacy of Nielsen’s future Internet
measurements, and believe tablet viewing measurement is more than two years out and subject to
significant limitations. Thus, the negative impact of FilmOnX on the Broadcast Companies’
advertising negotiations and revenues will persist.
14.

As noted above, advertising revenues represent a major portion of the Broadcast

Companies’ revenues. These revenues from advertising are critical to the Broadcast Companies’
development and acquisition of programming. If the Broadcast Companies cannot monetize the

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value of their content through advertising revenues as well as retransmission consent agreements
and other forms of licensing described in paragraphs 16-22, below, their ability and incentive to
develop, create and acquire original television programming for broadcast over-the-air will be
diminished. Further, the Broadcast Companies would be economically incented to shift from
airing their original programming by way of over-the-air broadcast television where services like
FilmOnX can steal it, to placing their original programming on a cable channel where its value
may be fully monetized. This would result in such original programming no longer being
available to the nearly 54 million people who rely solely on over-the-air broadcast television.
15.

Further, of these nearly 54 million Americans who rely on broadcast television,

the recent research shows that “broadcast-only households skew towards younger adults,
minorities and lower-income families.” See Exhibit B. A disruption or cessation of free, overthe-air broadcast television would negatively impact these groups. This is especially concerning
for low income families without broadband Internet access, for whom broadcast television may
be their primary window to the world.
16.

The second category of harm to the Broadcast Companies flows from the

detrimental effect that FilmOnX’s unlicensed service will have on the Broadcast Companies’
retransmission consent negotiations and relationships. Revenues from retransmission consent
licensing have become increasingly important and are used to fund the development and
acquisition of broadcast programming. The Broadcast Companies have entered into many
agreements with distributors such as Time Warner Cable, Verizon, Comcast and DirecTV, to
name a few, who pay fees for the right to retransmit the Broadcast Companies’ signals and sell
them to their customers. If FilmOnX is permitted to continue to retransmit the Broadcast
Companies’ television signals over the Internet without compensating or obtaining consent from

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the Broadcast Companies, that would have the effect of significantly reducing the amount such
distributors are willing to pay, and thereby the revenues that are generated by the Broadcast
Companies though such contractual retransmission arrangements will be reduced. While it is
impossible to know how much revenue the Broadcast Companies will lose when they negotiate
retransmission agreements as a result of FilmOnX’s conduct, based on my 24 years in the
industry, during which I have been involved on both sides of such negotiations, I am certain that
FilmOnX’s continuing ability to obtain and retransmit the Broadcast Companies’ Programs for
free will be a factor in such negotiations. In fact, it is my understanding that cable companies
have already referenced FilmOnX-type startups when proposing a reduction of their
retransmission fees, in seeking to eliminate those fees altogether, or in seeking other valuable
contractual concessions.
17.

Moreover, if left unchecked, FilmOnX could itself also seek to become a provider

of mobile device services to cable or satellite companies and to offer Broadcast Companies’
television signals to the mobile devices of cable or satellite companies’ customers. This would
encourage cable and satellite companies either to demand a reduction in their retransmission fees
or to stop paying those fees altogether.
18.

There is another aspect of harm related to retransmission consent negotiations and

relationships. To the extent that FilmOnX’s retransmission of the Broadcast Companies’
Programs over the Internet and via mobile devices have the effect of enabling FilmOnX
subscribers to cancel their subscriptions with their cable or satellite providers, those providers
have fewer subscribers and less revenue, which in turn causes them to pay less for retransmission
rights. In effect, FilmOnX uses the Broadcast Companies’ Programs to harm their business
partners in ways which will inevitably and directly harm the Broadcast Companies themselves

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and damage the goodwill the Broadcast Companies have with those with whom it has
retransmission consent agreements.
19.

The third category of harm relates to the broadcast station exclusivity that exists

in local markets. The FCC has granted exclusive rights to each station in its local “home”
market, and television stations in one market cannot make their feeds available in any other
market. By way of example, there is no legal way for television viewers in Washington D.C. to
receive over-the-air broadcast signals from distant cities, including New York, which is around
250 miles away. Within this structure, local broadcasters like WJLA-TV negotiate and receive
contractual rights to be the exclusive providers of the network programming they air in their own
local markets. When FilmOnX retransmits programming from one market into another, it
destroys this exclusivity and devalues what are supposed to be exclusive licenses for the
Broadcast Companies’ copyrighted programming by making an alternative source for this same
programming available. Further, this fractionalizes viewership of the same programming
between the local market and the imported broadcast station feeds, thus lowering the local
market station’s ratings that create advertising revenue for the local market station. Exhibit E to
the Shepard Declaration shows an example of FilmOnX engaging in this harmful conduct by
retransmitting New York broadcasts over the Internet into the Washington D.C. market.
20.

The fourth category of harm to the Broadcast Companies arises from the injuries

FilmOnX’s service, if unabated, will cause to their distribution models, including revenues from,
and relationships with, entities who license distribution rights from the Broadcast Companies
outside of the retransmission consent arena, and the Broadcast Companies’ own distribution
vehicles for their programming.

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21.

The Broadcast Companies license their content in many digital environments. By

doing so, the Broadcast Companies are able to obtain additional revenues from licensing
companies that want to distribute programming over different media (e.g., the Internet or digital
downloads) and/or on a delayed basis. FilmOnX’s unauthorized distribution of content into
these same environments represents unfair competition to these legitimate venues. For example,
Fox and many of the other Broadcast Companies license their content on a time-delayed basis to
companies such as Hulu (for distribution on www.hulu.com) and to Apple (for distribution
through iTunes). Fox and several of the other Broadcast Companies also license their content to
Hulu Plus, an online subscription service that provides the Broadcast Companies’ content to
paying subscribers one day after the content airs on television. Certain Broadcast Companies
along with Fox have also entered into agreements with cable/satellite companies to permit their
subscribers, who provide credentials, access that is not available to the general public, i.e., access
sooner after the program is telecast than is available to the general public.
22.

FilmOnX’s unlicensed service competes with the Broadcast Companies’

legitimate licensees for Internet viewers and revenue by offering all of the Broadcast Companies’
Programs on the Internet the very same day and time that they are telecast. If not stopped,
FilmOnX’s unauthorized distribution of the Broadcast Companies’ content on the Internet live,
and in advance of the Broadcast Companies’ licensees’ ability to show that programming, will
likely damage the Broadcast Companies’ relationship with its legitimate licensees and could
encourage others to replicate FilmOnX’s service further compounding the harm to the Broadcast
Companies.
23.

Similarly, several of the Broadcast Companies have their own websites (e.g.,

www.fox.com) that provide significant value to them in two ways. First, the websites allow

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viewers to access the Broadcast Companies’ own content, the value of which is being diminished
by FilmOnX’s unauthorized Internet streaming service that unlawfully competes with the
Broadcast Companies’ website content. Second, the Broadcast Companies derive value simply
from driving viewers to their websites. The Broadcast Companies have invested and continue to
invest millions of dollars to create, operate and maintain their websites. Many of the Broadcast
Companies encourage viewers who miss episodes of their Programs to visit the Broadcast
Companies’ websites to watch the programs they missed. Viewers who come to the Broadcast
Companies’ websites to watch programs represent a significant marketing opportunity for the
Broadcast Companies. While they are on the Broadcast Companies’ websites, viewers have an
opportunity to look at the upcoming schedule of the Broadcast Companies’ programs, to shop for
products related to the programs, and they are exposed to promotions and advertising benefitting
the Broadcast Companies. This entire experience is designed to establish a link between the
Broadcast Companies and their viewers. To the extent FilmOnX causes these Internet viewers to
have less reason to go to the Broadcast Companies’ websites, the Broadcast Companies lose not
only revenue but also the opportunity to establish such a “link” and brand identification with
their viewers. The value of this loss of connection between the Broadcast Companies and their
viewers would be impossible to calculate in monetary terms.
24.

FilmOnX’s Internet service and mobile applications also unfairly compete with

certain of the Broadcast Companies’ own mobile TV offerings. For example, Fox, NBC
Universal, and others have formed a joint venture called Dyle (sometimes referred to as the
Mobile Content Venture). The Dyle service enables users to watch live broadcast programming
on their mobile devices. Dyle, which offers approximately 90 stations, is currently available in
35 markets, including Los Angeles. Fox and NBC Universal have invested substantial financial

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resources, marketing and demographic research, and goodwill into this emerging market, all of
which will be irreparably harmed by FilmOnX’s service.
25.

Further, Fox recently launched an application called “Fox Now” that allows

viewers to watch Fox programming on their mobile devices and on connected devices.
Additionally, I am informed and believe that Disney and ABC have launched a mobile internet
TV service called “WatchABC” in which they invested resources and goodwill. Through
WatchABC, Disney and ABC offer authorized access to live broadcast television as well as
video on demand access to their Programs. I am further informed that other Broadcast
Companies have similar products under development and/or have authorized their Programs to
be broadcast live with the Mobile 500 Alliance. In competition with these authorized mobile and
connected devices services like Fox Now and WatchABC, FilmOnX streams the Broadcast
Companies’ Programs live to users of mobile devices and connected devices who have
downloaded one of FilmOnX’s various applications.
26.

Further, I am informed and believe that FilmOnX is placing advertisements that it

has sold to advertising companies before the Broadcast Companies’ programming, and FilmOnX
requires its users to watch the FilmOnX-placed advertisement before being able to watch the
Broadcasting Companies’ content. As such, FilmOnX is deriving financial benefits the
Broadcast Companies’ Programs without the financial burdens associated with creating or
licensing such content. This provides FilmOnX with a significant – and extremely unfair –
advantage in the competition for mobile TV viewer and revenues derived from mobile TV
offerings.
27.

The fourth category of harm arises from the piracy risk that FilmOnX’s service

creates. The Broadcast Companies undertake great efforts to secure their content from piracy.

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One of the principle means of protecting their content from piracy is to ensure that parties who
distribute the Broadcast Companies’ content enter into contracts that require them to abide by
procedures and technical standards designed to protect the Broadcast Companies’ content from
piracy that are acceptable to the Broadcast Companies. Obviously, since FilmOnX has not
entered into any contract with the Broadcast Companies, it is under no enforceable obligation to
take any such measures to protect the Broadcast Companies’ content.
28.

Similarly, because FilmOnX has no contract with the Broadcast Companies, the

Broadcast Companies’ reputation is put at risk, which is the fifth category of harm. It is of great
importance to the Broadcast Companies to safeguard their reputation with respect to the quality
of the viewing experience that people can expect when they view the Broadcast Companies’
content. Many of the Broadcast Companies’ license agreements with distributors require that
certain quality standards be met. In the absence of any agreement with FilmOnX, the Broadcast
Companies have no way to ensure that the viewing experience of people watching the Broadcast
Companies’ Programs on FilmOnX will be consistent with even the minimum standards
acceptable to the Broadcast Companies. To the extent that FilmOnX’s reliability and video
quality is not consistently at the level that the Broadcast Companies require contractually,
FilmOnX threatens to undermine the Broadcast Companies’ reputation for the highest levels of
broadcast quality. Moreover, the Broadcast Companies lose the ability to control the types of
programming that may be viewed in proximity to their own, further affecting their reputation for
quality.
29.

What is more, as FilmOnX’s service is unlicensed, there is nothing preventing

FilmOnX from preempting the Broadcast Companies’ programming, from replacing ads that
appear within the Broadcast Companies’ Programs, adding banner ads around the programming,

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or from inserting content into (or removing content from) the streams. Indeed, FilmOnX has
already commenced placing advertising in and around the Broadcast Companies’ programming
as explained in more detail below (see Paragraph 30 and 31).
30.

Specifically, FilmOnX places banner advertisements above its online television

viewer (an approximately 4” x 7” television screen on FilmOnX’s webpage that streams
programming on its website). These banner advertisements, which promote FilmOnX’s own
programs and related services (e.g., World IBO Boxing Championships on FilmOn ) as well as
other products (e.g., HuluPlus, BMW, or xfinity) remain visible the entire time a viewer watches
programming on FilmOnX’s website, including local Fox channels. Further, FilmOnX brands its
“FilmOnX” or “FilmOn” insignia on its television viewer, and superimposes it over the
programming being streamed on the website. This graphical practice is commonly referred to in
the television industry as placing a “bug” over the video display, and is a prominent form of
branding employed by virtually all of the Broadcast Companies. As I noted before, I personally
have viewed Fox’s local channel being streamed on FilmOnX’s website. In doing so, I have
observed the banner advertisements that FilmOnX places at the top of the screen and which are
visible the entire time someone watches Fox on filmon.com. I have also seen the “FilmOnX”
insignia “bug” superimposed on the local Fox channel being streamed in the online television
viewer. I am informed and believe that FilmOnX is still engaged in the practice of inserting
banner advertisements and superimposing the “FilmOn” insignia “bug.” Examples of FilmOnX’
s banner advertisements and branded “FilmOnX” or “FilmOn” insignia are attached to the
Declaration of Julie A. Shepard as Exhibits H, I and J, filed concurrently herewith.
31.

As noted above in Paragraph 26, in addition, I am informed and believe that

recently FilmOnX started selling and inserting advertising spots in FilmOnX’s retransmission of

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the Broadcast Companies’ programming and FilmOnX’s users cannot skip these advertisements
in their entirety inserted by FilmOnX, but rather they are required to watch at least a portion of
them before they can view the Broadcast Companies’ programming. To explain in more detail,
when a person visits the filmon.com website and selects one of the local channels of the
Broadcast Companies to watch, they are often required to watch a 30 second advertisement
before they watch the channel. This 30 second advertising spot is inserted in the transmission
process by FilmOnX, not by the Broadcast Companies. Advertising companies are paying
FilmOnX, not the Broadcast Companies, for its placement of these advertisements. I understand
that the advertisements placed by FilmOnX which have appeared before the Broadcast
Companies’ programming has ranged from Best Buy commercials to advertisements for college
courses and from video games advertisements to beer commercials. Screen shots providing
examples of advertisements that FilmOnX has placed before the Broadcast Companies’
programming are attached to the Declaration of Julie A. Shepard as Exhibit G, filed concurrently
herewith.
32.

FilmOnX’s preemption of the Broadcast Companies’ programming and placement

of advertising in or around their programming risks creating numerous problems for the
Broadcast Companies, the essence of which is that the Broadcast Companies lose control of their
own content. And, this interferes with the Broadcast Companies’ relationships with advertisers
and their ability to sell advertising to them. By way of example, because FilmOnX’s service is
unauthorized, there is no agreement in place which would allow the Broadcast Companies to
require FilmOnX to abide by advertising agreements covering the Broadcast Companies’
Programs and/or government restrictions on advertisements that may be displayed when certain
shows are broadcasts. In terms of advertising agreements, sometimes a Broadcast Company will

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enter into an agreement that provides an advertiser with exclusivity in advertising for their
particular product during a specific show. For example, Fox could have an agreement with The
Coca Cola Company that the only soda which will be advertised before, during or after a
particular program will be Coke. Because FilmOnX has stripped content control away from Fox
and the other Broadcast Companies, FilmOnX could interfere with such an agreement. This
could occur as follows: when someone goes to filmon.com and selects to view Fox’s program
where Coke is the only soda which is supposed to be advertised, Defendants could have inserted
an advertisement for Pepsi in the transmission to the user and, as explained above, the user
would be require to watch the Pepsi commercial before seeing Fox’s programming. Similarly,
there is a government regulation prohibiting alcohol commercials during broadcasts of college
sports. As FilmOnX’s service is unauthorized, there is nothing to prohibit FilmOnX from
displaying a beer commercial prior to allowing a user to watch a college game being shown by
one of the Broadcast Companies. These are only examples of the myriad of ways that the
Broadcast Companies’ reputation and goodwill are put at risk by FilmOnX’s unauthorized
service.
33.

The sixth category of harm involves the damage to the Broadcast Companies’

relationships with a multitude of entities with which they do business. The Broadcast
Companies have contracts with a number of businesses and individuals which include limitations
on how and when certain programs may be streamed over the Internet. By immediately
retransmitting all of the Broadcast Companies’ content on the Internet, FilmOnX could place the
Broadcast Companies in breach of those agreements. In addition to opening up the possibility
that licensors could withdraw content during the current license terms, the Broadcast Companies

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EXHIBIT A

EXHIBIT B