Aereo bankruptcy: Streaming startup will keep operating, but how?

Aereo says that it has filed for Chapter 11 bankruptcy protection, saying an unfavorable ruling by the US Supreme Court was too difficult to overcome. Aerop made waves earlier this year by letting people record and stream broadcast TV online. 

Online streaming service Aereo says that it has filed for Chapter 11 bankruptcy protection, saying an unfavorable ruling by the U.S. Supreme Court was too difficult to overcome.

The Internet startup, which is backed by Barry Diller, made waves earlier this year by letting people record and stream broadcast TV online. At the time, it was seen as an alternative to cable, offering a few dozen local broadcast channels and the Bloomberg TV financial channel on multiple devices for just $8 a month.

Aereo CEO Chet Kanojia broke the news in a letter to Aereo consumers: 

Chapter 11 will permit Aereo to maximize the value of its business and assets without the extensive cost and distraction of defending drawn out litigation in several courts.

We have traveled a long and challenging road. We stayed true to our mission and we believe that we have played a significant part in pushing the conversation forward, helping force positive change in the industry for consumers.

We feel incredibly lucky to have had the opportunity to build something as meaningful and special as Aereo. With so many shifts and advances in technology, there has never been a more perfect time to take risks, challenge the status quo and build something special.

Thank you for all of your support. Your emails, tweets, Facebook posts and letters have meant the world to us. We are incredibly grateful to have gone on this journey together.

Netflix , Amazon and Hulu offer full episodes of popular shows from broadcast networks ABC, NBC and Fox like "The Colbert Report" the next day for free. But Aereo offered live streaming of those TV channels.

In June, the Supreme Court ruled that Aereo operates like a cable TV company. As a result, the court said the service violates copyright law unless Aereo pays broadcasters licensing fees for offering TV station programs to customers' tablets, phones and other gadgets.

Three days after the court ruling, Aereo announced that it was temporarily closing down its operation.

CEO Chet Kanojia said in a statement Friday on the company's website that the Supreme Court decision "effectively changed the laws that had governed Aereo's technology, creating regulatory and legal uncertainty."

Kanojia said that the Chapter 11 filing will allow Aereo Inc. to maximize the value of its business while avoiding the cost and distraction of litigation.

Aereo also named Lawton Bloom as its chief restructuring officer.