Aereo are entitled to do this. But I don't blame the broadcast companies for freaking out - if Aereo can do this then the cable companies can too - the broadcast networks will lose their retransmission fee revenue (at a time when they're not exactly swimming in cash anyway) and the cable companies get to boost their profits even more. Which they don't deserve.
The only other solution for the broadcast companies will be to switch off their antenna broadcasts, which would also be a big shame.