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Aereo loss is a very big deal

Thu, 06/26/2014 - 1:34pm
Brian Santo

While the average TV viewer saw the Supremes’ smackdown of Aereo as a largely inconsequential elimination of just another cord-cutting option, people in the TV business knew better. The Court obliterated a technology that could have been a game changer.

I’m on record agreeing with what ended up being the Supreme Court’s minority opinion. Aereo was not the same as a cable company; Aereo was a rental operation. Subscribers rented access to an antenna and the virtual equivalent to a DVR, and the only difference is that the antenna and the DVR were at the other end of a wire. This puts me in agreement with Antonin Scalia for perhaps the very first time, which means someone should check the weather in Hades today; the temperature might have changed drastically.

Another thing the average viewer doesn’t get is that Aereo and its approach was a hedge against rising cable costs.

It’s no news to anyone in the TV business that broadcasters are squeezing cable operators for higher and higher retransmission fees, and those fees eventually have to get passed along to consumers already cranky about how much they’re paying for TV.

If cable operators had the option to ally with Aereo, or perhaps duplicate the approach as an ancillary service they provide themselves, it would have constituted a very clear counterweight in a negotiating position that is now far out of balance in favor of broadcasters. This is why the ACA, representing the smallest cable operators, whose subscribers tend to be most cost-sensitive, was rooting for Aereo. The power imbalance is now only going to get worse.

That option is gone. Retrans fees are going to keep going up. Cable fees are going to keep going up. That’s a win for broadcasters, but for no one else. It’s a clear loss for viewers, larger than most realize.

While there are millions upon millions of people who will undoubtedly submit to higher pay TV fees, there’s a growing population for whom TV is not important enough to pay that much for – they’d rather get whatever they can from web-based (aka over-the-top) video sources, or illegally. The piracy numbers on “Game of Thrones” are impressive (or alarming, or something).

The breakdown of the existing TV model is accelerating, and this Supreme Court decision is going to give that process a little more impetus.

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