Could the success of Aereo lead to the end of free TV?

Steven Loeb · April 8, 2013 · Short URL:

Fox says it could become cable channel to cover retransmission fees not paid by Aereo

(Updated to reflect comment from Aereo)

Web TV service Aereo, which  allows users to watch live TV on their mobile devices or computers without needing a cable subscription, just scored a major victory against a group of broadcasters that were seeking to shut it down for copyright violation. The victory could potentially backfire, though, causing broadcasters that currently offer free programming to switch over to cable subscription packages to cover the losses.

If Aereo wins its court battle against the broadcast network, Fox will consider becoming a subscription service to protect its revenue stream, Chase Carey, News Corp president and COO, said money, it was reported by Variety.

“If we can’t have our rights properly protected through legal and governmental solutions, we will pursue business solutions. One solution would be to take the network and make it a subscription service. We’re not going to sit idly by and let people steal our content," Chase said, speaking at the National Association of Broadcasters in Las Vegas.

"It’s not a path we’d love to pursue. But we’re not going to sit idly by and let people steal our content.”

The case that Carey is referring to one that first came to light In March of 2012, when many New York-based broadcast stations participated in lawsuits filed against Aereo, stating that the business violated copyright law by using their broadcasts in an unauthorized Internet delivery service that is receiving, converting and retransmitting broadcast signals to its subscribers for a fee.

In July, A U.S. district judge denied the broadcasters an injunction finding that Aereo’s method of allowing its user to control viewing and recording from their PCs, or mobile devices, had already been covered by an earlier decision in 2008, Cartoon Network v. CSC Holdings, aka “Cablevision."

The ruling was then appealed in the U.S. Appeals Court for the Second Circuit, who reaffirmed the decision earlier this month.

While some may wonder what the big deal is for broadcaster, since they will still be able to sell advertising, the issue at hand is over retransmission fees, which require cable operators, and other distributors, to obtain permission from broadcasters before carrying their programming. Operators will often be asked to pay to carry the station.

Aereo retransmits the broadcast without permission and without paying. So, to cover these loses, Fox is saying that it might have to turn into a subscription service to cover the loses.

A network that has to carry “big event television” in news, sports and entertainment “simply isn’t sustainable in an ad-supported-only model," he said.

So far, other broadcast networks like NBC, ABC and CBS have not made similar threats, but it is easy to see them having the same opinion.

 “Aereo has invented a simple, convenient way for consumers to utilize an antenna to access free-to-air broadcast television, bringing television access into the modern era for millions of consumers. It's disappointing to hear that Fox believes that consumers should not be permitted to use  an antenna to access free-to-air broadcast television," Virginia Lam, spokesperson for Aereo, told VatorNews. 

"Over 50 million Americans today access television via an antenna. When broadcasters asked Congress for a free license to digitally broadcast on the public's airwaves, they did so with the promise that they would broadcast in the public interest and convenience, and that they would remain free-to-air. Having a television antenna is every American's right." 


About Aereo

New York City-based Aereo is a Web platform that allows users to watch live TV on their mobile devices or computers. It grabs over-the-air TV signals and routes them to users over the Internet, so they can watch broadcast TV whenever and wherever they want, on devices including PCs, iPads and Roku boxes. 

No cable subscription is required to use Aereo and membership plans begin at $1 per day, $8 per month or $80 per year. Aereo is currently supported on iPad, iPhone, Chrome, Internet Explorer 9, Firefox, Safari, Opera, AppleTV and Roku.

In January, the company raised $38 million Series B round of financing, bringing its total raised to $63 million, to expand to 22 new cities across America: Boston, Miami, Austin, Atlanta, Chicago, Dallas, Houston, Washington, DC, Baltimore, Detroit, Denver, Minneapolis, Philadelphia, Pittsburgh, Tampa, Cleveland, Kansas City, Raleigh-Durham, Salt Lake City, Birmingham, Providence, and Madison.

Then, in February, the service announced that it would be coming to 29 new counties across the four states of New York, New Jersey, Connecticut and Pennsylvania, bringing the service to over 19 million new customers.

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