Diller Says 35% of U.S. May Eventually Subscribe to Aereo

Billionaire Barry Diller, the backer of Aereo Inc., said the online-television service may eventually get as much as 35 percent of U.S. households to subscribe if it overcomes legal challenges from broadcasters.

People in their mid- to late-20s aren’t willing to pay $100 a month for cable-TV packages, making Aereo’s $8 service increasingly attractive, Diller said today at The Year Ahead: 2014, a two-day conference hosted by Bloomberg LP in Chicago.

Aereo, based in New York, offers broadcast channels such as CBS and NBC to subscribers over the Internet in nine U.S. cities. Media companies including Walt Disney Co. and 21st Century Fox Inc. have sued the startup, saying it’s reselling their content without permission. Aereo argues that it doesn’t need to compensate the networks because it receives television signals fairly using clusters of antennas.

“This closed circle of broadcast and cable and satellite is going to break up,” said Diller, 71. “It’s not going to maintain itself in the next decade.”

The broadcasters have asked the U.S. Supreme Court to rule that Aereo is an illegal operation. In the meantime, federal judges in Boston and New York have permitted the startup to operate during the legal fight, and the service continues to spread to new cities.

“We are putting more money in,” aiming to eventually roll out across the U.S., said Diller, who serves as chairman of the Internet holding company IAC/InterActiveCorp.

Friendly Legislation

Aereo got a boost on Nov. 12 when U.S. Senator Jay Rockefeller introduced a bill to help online video services and Aereo’s antenna-based system challenge cable providers and broadcasters. Rockefeller, a West Virginia Democrat who serves as chairman of the Commerce Committee, said he wants consumers to benefit from lower costs and increased choice.

The bill would “give consumers the ability to watch the programming they want to watch, when they want to watch it, how they want to watch it, and pay only for what they actually watch,” Rockefeller said in a statement last week.

Still, the legislation “is likely to face an uphill battle in this Congress,” given the opposition of deep-pocketed media companies, said Jeffrey Silva, a Washington-based analyst with Medley Global Advisors.

Diller, who spent decades in the television industry and helped create the Fox network, said he isn’t surprised that media companies are challenging Aereo.

If he were still a broadcast executive and encountered competitors like Aereo, “I’d sue ’em,” he said.

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