Rabbits Ears Are Still Free May Now Affect Television Distribution Battles In the US

–

Controlling shareholder Barry Diller / Getty

–

/By Alan Gallindoss /

Television streaming service Aereo is now expanding to more US cities and has just announced it will start service in Utah on August 19th, 2013 after successful pilot programmes in New York, Boston and Atlanta. In addition, it is likely the New York-based company will build an operations center in Salt Lake City sometime early next year to monitor and manage the service in the western U.S., said Chet Kanojia, Aereo founder and CEO, according to the Salt Lake Tribune. “It’s in the early planning stages, but we think that makes a lot of sense.”

Aereo has been creating a buzz in the United States lately, more for what it might do than for what it has actually done to date though. According to controlling shareholder, and media mogul, Barry Diller à la carte programming, especially piped over the internet to your computer, to your mobile device or to your television set hooked up to your computer, is the future of media consumption. Young people, he says, aren’t interested in subsidizing other content that they aren’t interested in, which is the way that cable packages are currently set up.

Such slicing and dicing is exactly what Aereo does accomplish, however, through a clever trick that has huge warehouses full of tiny rabbit’s ear antennas with each one dedicated to an individual subscriber, who then gets the signal over the internet to his computer/tv set. All for around US$10 a month. Since each such individual signal received is not publicly redistributed it makes an end run around the law. Cable companies are furious and so are the TV broadcast networks as it threatens to cut them both out completely and they have taken legal actions, so far unsuccessfully. At a recent tech conference, when asked frankly about customers, Diller acknowledged that “we have very few.” Aereo is now set to spread out to 22 cities in the next few months, from its current opening phase in New York, and Diller says… “it’s just beginning”…. “If it works, and it gets a reasonable amount…15-20 million homes, we’ll have a billing relationship with them and we’ll be able to generate our own programming”… Diller said. Original programming for media streaming has become a major theme, with Amazon, Netflix and Hulu all working their way out from re-broadcasting to bespoke shows.

So far the US Federal Court of Appeals for the Second Circuit has sided with Aereo and denied an injunction which had been sought against them by the broadcasting companies. Last week, again, in its third victory there, the appeals court declined to even hear the broadcasters’ appeal. Other than today’s announcement for Utah it seems Aereo has not yet announced any plans to expand further in the West Coast, in markets covered by the Ninth Circuit Court, where, complicating the legal picture even further, a service very similar to Aereo was indeed rejected in December by that court.

In another new twist however Aereo may now even be making temporary allies in at least one cable company, where the old adage sometimes comes into play, you know: the enemy of my enemy is my friend.

So What is Going On?

Network broadcaster CBS and Time Warner Cable are currently in a major contract dispute over the re-transmission fees that Time Warner pays to CBS for taking their signals. The first location where this is playing out happens to be New York and the two companies indicate that if the dispute is not resolved by Wednesday, CBS could be blacked out from as many as a quarter of Time Warner’s twelve million subscribers.

Conspiracy theorists therefore have happily mused that, while Time Warner would not actually attempt itself to commence an Aereo style service to thwart CBS, since they are after all basically still philosophically opposed to them, they might not mind too much if Aereo got a few customers for a while out of their current dispute. Indeed a Time Warner spokeswoman, Maureen Huff, said Sunday that it might recommend Aereo to its New York subscribers if CBS was blacked out. Wow, talk about devious; and, Time Warner might even also mention to its own subscribers that Aereo actually offers a 30-day free trial, too which might tide them over nicely till their dispute with CBS is settled.

“This conflict just further highlights the importance of having alternatives in the marketplace, ” Chet Kanojia, the chief of Aereo, said in a statement. “It’s also a great reminder that consumers have the right to watch over-the-air television using an antenna. Whether they use Aereo or some other type of antenna, it’s their choice. That’s the beauty of having alternatives.”

At the same earlier tech conference Diller had also said, referring to lawsuits that have already been filed against him but so far been thrown out by the courts: “Any incumbent wants to guard their wall as aggressively as they can….” and about the resistance that Aereo has been facing from traditional broadcasting….. “I’m kind of happy they sued us in a noisy way because it’s helping Aereo get known.”

If the dispute between CBS and Time Warner continues to ratchet up the heat he may really get his wish granted – just in a slightly different way.

Read More:

Barry Diller Learns An Expensive Lesson About Coke

Billionaire Media Mogul Chairman Of IAC Corp Barry Diller Is In The News Twice This Week

Diller and Murdoch- Shaping Up To Do Battle For The Future Of US Television