Why Aereo Is Scaring The Hell Out Of Broadcast Networks

Over the last few days, Aereo has gone from a tiny rebellious start-up that not many people knew about to a hot TV news topic, with broadcast networks threatening to go off the air or make people pay up to watch their free content if it doesn’t stop existing right this minute. So what the hell is Aereo, anyway, and why are broadcast networks so scared of it?

Since you brought it up, what the hell is Aereo?

It’s a start-up that lets you rent a small antenna and use a cloud-based DVR to watch any TV channel being broadcast in the New York City-area market. You can subscribe to it or pay a buck for a single day of use, and you can stream live television to any supported device, which is pretty much anything with a processor. It’s expanding to twenty-two other cities later this year.

So basically it’s a TiVo on the Internet, with no cable.


Is there ad-skip?

Not in any meaningful sense.

So, wait. No ad-skip, broadcast networks only, why are the networks freaking out?

A multitude of reasons, but it basically boils down to the fact that Aereo doesn’t pay them to stream their content on the Internet.

So what? I’ve got those networks on my cable box, and I don’t pay for them. It’s free.

Actually, you do. Under a 1992 law, cable operators have to pay for the privilege of carrying what you can pick up for free on an antenna. And it makes the networks a couple of billion every year.

Aren’t they supposed to be making money on advertising? Like, I watch the show, and the ads make them money?

As we’ve repeatedly pointed out, the Nielsens are not terribly accurate, and audiences have splintered substantially as it becomes easier for you to get your television from, say, Amazon Instant Video, or Hulu, or TiVo it, or buy the DVDs, or wait for them to come to Netflix. As a result TV advertising isn’t worth nearly as much as it was five years ago.

The reality is, without retransmission fees networks wouldn’t be nearly as profitable as they’re supposed to be, and possibly may start losing money consistently.

So how does Aereo get away with it?

By ducking through a series of legal loopholes. For example, if they only used one antenna, under the law that would be a “public performance” and Aereo would be shut down. But by using thousands of little antennas, and renting one to each individual subscriber, it’s within the limits of the law.

Let me guess, the networks want to change the law or sue them out of existence.

That appears to be the plan, but so far, every effort to shut Aereo down legally has failed. As for changing the law, that might not really be on the table, either. It’s hard to see what could be altered under the law without, say, making TiVo illegal.

So basically the networks are hoping Aereo runs out of money for lawyers before they lose in court?

Either that or the ruling against ivi, a somewhat similar company, applies to Aereo. Or Apple does what Apple does and breaks them to their will first.