Aereo: Cable’s retrans friend

Fri, 04/12/2013 - 12:14pm
Mike Robuck

It’s been a busy week for Aereo. The Barry Diller-backed company that sends over-the-air broadcast signals to “dedicated” dime-sized antennas was in the news at the NAB conference in Las Vegas coming under fire from Fox Networks, and parent company News Corp., CBS and Univision, to name a few.

Raise your hand if you thought near the end of last year that Aereo would prevail in court. Thought so. Aereo hasn’t won the war just yet, but did win a major battle on April 1 when a federal court of appeals affirmed a federal district court’s earlier decision to deny broadcasters’ request for a preliminary injunction against Aereo. The list of plaintiffs was comprised of  NBCUniversal, ABC, CBS and Fox, all of whom contend that Aereo is ripping off their over-the-air signals.

Aereo launched its streaming service last year in New York City and was promptly sued by the major broadcast networks. In addition to the “personalized” antennas, Aereo also employs a network DVR technology that lets users pause, rewind and fast-forward live or recorded programs on a home DVR. 

Aereo lets customers capture over-the-air broadcasts from 29 local channels for viewing on devices, with subscriptions starting at $8 a month. Aereo is currently supported on iPad, iPhone, Chrome, Internet Explorer 9, Firefox, Safari, Opera, Apple TV and Roku.
In January, Aereo said it planned on expanding its service to 22 more cities across the nation this year. 

Aereo’s business model is a direct threat to broadcasters, but if it emerges victorious in court it could be beneficial to some cable operators. One cable operator executive said, off the record, that Aereo’s use case was “more of an opportunity than a threat for the MSOs.”

“It could be good for cable operators if those subs were not video subs in that they could get the data business, which they need to watch it on streaming, but the main reason I suspect he is saying it could be good is that when retransmission contracts come up for renewal, cable guys will argue ‘Why pay to carry broadcast channels when Aereo is getting them for free?’” another cable operator industry expert wrote in an email to CED.

At NAB this week, News Corp COO Chase Carey said that if Aereo does win out in court Fox would consider taking its programming off of the air and making it available only to cable and satellite subscribers. Some Fox affiliates said they were on board if Fox decides to take its signals private. 

It’s hard to imagine that Fox would purposely drop itself from the Big Four lineup  of networks. But as you may recall, several years ago Fox dug its heels in during a retransmission dustup with Cablevision that led to Fox pulling the plug on its programming—during the World Series that was carried by Fox— in Cablevision’s footprint, so anything is possible in these dark days of escalating retransmission fees.

In the short term, Fox will wait to see how all of this plays out in court. The Second Circuit Court of Appeals ruled in favor of Aereo by a 2-1 vote, but it’s hard to imagine that Comcast-owned NBCUniversal, Disney-backed ABC and News Corp’s Fox will quietly fade to black in the face of Aereo “pirating” their signals.

“I suspect they (Aereo) are really riding the nDVR precedent that Cablevision set,” the cable industry expert wrote. “So if you believe the nDVR case, then this one has similar legal merits, but only under certain conditions. For that to hold, I believe they (users) would have to only access it where they would normally consume free-to-air, for example in the home as opposed to streaming it IP a la TV Everywhere . For that I think one does need streaming rights and have your own copy, which Aereo does by ‘renting’ an individual antenna."


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