Both Fox and CBS have threatened to make their networks only available through cable and satellite. Broadcasting over the air is an expensive and, in some ways, antiquated business. It’s also very profitable though, and people who run broadcast networks aren’t willing to simply let go of old business models.
Chet Kanojia started a company called Aereo. It’s a complicated business because it attempts to honor and follow the rules set by content producers. For $12 or less a month, each Aereo subscriber gets their own antenna and DVR that records over the air TV. The subscriber can watch everything that’s recorded on a computer or mobile device whenever they want. It’s essentially an alternative to subscribing to cable or satellite.
Broadcasters are fighting Aereo in court because the service keeps them from getting paid by cable and satellite providers. Cable and satellite providers pay a transmission fee in order to broadcast local TV stations. Without that transmission fee, a local TV station’s only source of revenue is advertising.
So far, Aereo has won two court battles against broadcasters who are trying to stop the service. Aereo’s founder recently went to Washington, D.C., to lobby for help as it defends itself against broadcasters who want to shut them down. That’s what prompted Chase Carey with FOX and Les Moonves with CBS threaten to stop all over the air broadcasts.
“We won’t just sit idle and allow our content to be actively stolen,” Mr. Carey told the an audience at the National Association of Broadcasters conference in Las Vegas. “It is clear that the broadcast business needs a dual revenue stream from both ad and subscription to be viable.”
Mr. Moonves said in a phone interview that he had already spoken to local stations about taking CBS off the air.
Aereo is still very small. It only operates around New York City. However, Aereo just announced expansion plans for 22 new US cities in 2013.