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Does Aereo Mean the End of Broadcast TV?

Does Aereo Mean the End of Broadcast TV?

Photograph by Ryan Lane/Getty Images

If, suddenly, there was no longer such a thing as broadcast TV, would anybody notice?

The question arose on Monday as part of the ongoing acrimony between traditional broadcasters and Aereo—the New York-based startup that allows subscribers to watch traditional broadcast TV over the Internet, much to the broadcasters’ collective chagrin.

Last week an appeals court in New York rejected broadcasters’ request for an injunction to shut down Aereo. The fight will now likely head to trial. In the meantime, Aereo, which is currently available only in New York, is planning to expand to 22 more cities in the U.S. All of which has broadcasters fuming, publicly mulling over drastic (or, at least, drastic-sounding) measures.

To wit: On Monday, at an industry conference in Las Vegas, News Corp. (NWSA) Chief Operating Officer Chase Carey said that if the U.S. courts won’t shut down Aereo, his company might stop airing Fox altogether and instead turn the broadcast network into a channel that’s only available to cable and satellite subscribers.

Anyone with an antenna can watch Fox shows, such as The Simpsons, American Idol, and Glee, for free. Ditto anything aired by ABC (DIS), NBC (CMCSA), CBS (CBS), and PBS. But these days most people don’t get their TV using an antenna. They get it via cable and satellite subscriptions, the distributors of which (Comcast (CMCSA), DirectTV (DTV), Time Warner Cable (TWC), etc.) pay so-called retransmission fees to the owners of the broadcast networks for the right to include their shows alongside the cable-only channels. In recent years retransmission fees have grown into a multibillion-dollar revenue stream that’s crucial for broadcasters.

Aereo, on the other hand, pulls broadcast signals out of the air and redirects them online to paying subscribers using a fleet of mini-antennas. The system is designed, in large part, to avoid having to pay the broadcasters any retransmission fees.

“We need to be able to be fairly compensated for our content,” Carey said on Monday. “This is not an ideal path we look to pursue, but we can’t sit idly by and let an entity steal our signal.”

Aereo quickly responded with a statement, which noted that “having a television antenna is every American’s right.”

How many Americans are currently exercising their antenna rights? According to Nielsen (NLSN) and SNL Kagan, about 100 million of the 114 million U.S. homes with TV sets subscribe to cable, satellite, or fiber-optic pay-TV systems. If News Corp. limited Fox to cable and satellite subscribers, in other words, the majority of Americans wouldn’t even notice.

The 14 million homes that do get Fox over the airwaves shouldn’t expect to lose the signal anytime soon. The legal battle between Aereo and the broadcasters is just getting going.

Gillette is a staff writer for Bloomberg Businessweek in New York.

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