Aereo, a cable television startup backed by Barry Diller and other venture capitalists, has just been sued by NBC, CBS, ABC, Fox and a local New York PBS station for using their content without their permission.

Aereo uses one individual antenna per customer to deliver television directly to an iPhone (News - Alert) or an iPad. As of now, subscriptions are invitation-only, but the company plans to expand its service to other subscribers on March 14. Subscribers can pick up 27 channels in Brooklyn, and Aereo hopes to expand its service into other markets.

To get around the law concerning the retransmission of content, Aereo avoids intercepting content through one large antenna and then streaming it to the Internet. Instead, each customer has his or her own antenna, and Aereo’s legal position is that every customer has the right to watch television through his or her own antenna. Attorneys for the major networks, however, disagree.

“Aereo's service to the end user is similar to and competes with cable or satellite operators and telephone companies that also retransmit broadcast programming to their subscribers, except that Aereo's service is unlawful,” the stations’ attorneys stated in the court briefing.

Supporters of Aereo say that it is one way to break the cable companies’ monopoly on broadcast channels. Most companies offer broadcast channels as parts of a larger, more expensive cable package, and watching programming online may cost even more. Aereo seeks to get around the cable arrangement, in a sense, by letting customers rent their own antenna. The question before court reporters, however, is whether or not those antennas have the right to retransmit broadcast channels.

Barry Diller, the former CEO of Fox, now chairs InterActivCorp, which owns websites like Ask.com and Match.com. InterActivCorp has a large stake in the success of Aereo, having placed a reputed $20 million in venture capital into the idea.

Broadcasters have asked the judge to block the service from being available to the public before Aereo officially releases it. Aereo responded that it, “does not believe that the broadcasters’ position has any merit.”