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Aereo vs. ABC to the Supreme Court can change everything about how we watch TV — and could put the NFL on cable, finally

Let’s say you’re tired of how cable companies are straight-up gouging you (I was), so you cut the cord (I did). What are your options for watching the shows you still love? You can go with a combo of Netflix (delayed release), Hulu Plus (immediate release, but only for some shows), Amazon Prime (mostly delayed release), HBO Go (immediate release, but only for HBO shows and you need to jack someone’s cable subscription info), and various digital channels like Roku apps or WWE streaming or what have you. All these options are good, but together they add up to a certain cost, and they do often require specific-type hardware that’s an initial investment. That’s where Aereo came in. They effectively constructed a work-around on the whole idea of watching live TV without a cable subscription. Here’s how it essentially works, via Business Insider:

By setting up clusters of mini-antennas in a certain service area (New York City, for example), the company can take those free, over-the-air broadcasts and become a sort of middle-man technology to get them to you. On the Aereo website, subscribers choose the local programs they want to watch using a cloud-based digital video recorder. Then, one of Aereo’s mini-antenna directs the right broadcast signal to that DVR to record the show. You can watch the show as it happens (with a slight delay), or you can save it for later viewing.

Can you think of someone who might be pissed off about this? If you answered “big television networks,” you are accurate. Aereo basically takes control of their programming and does so without any money going back to them. So, as one does in America, they sued. And as sometimes happens with bigger lawsuits, this one’s headed to the Supreme Court. People in TV and streaming media fields believe the case is critical to the future of how we watch, for this reason: if Aereo is shot down and viewed as unconstitutional (or has to change basic things about its functioning), then “Big Cable” (or “Big Networks”) won and future lawsuits could challenge Netflix and other services. If Aereo succeeds, you’re probably going to see a lot of cable companies simply develop their own streaming services. Ad Week has some of the legal background/run-up to the Supreme Court review stage, including this section:

If found legal, Aereo could take a serious financial bite out of the broadcast business model by paving the way for cable and other services to circumvent copyright and lucrative retransmission fees, a growing source of revenue for broadcast station owners. Some cable companies, like Fox, even threatened to turn all their broadcast programming into cable channels.

There it is — and this has been discussed around the Internet for years. The biggest cash cow for TV is the NFL. It’s not even close. Nine of the top 10 broadcasts of 2013 were football:

NFL

If Aereo wins this Supreme Court case, that’s going to piss off the NFL — their TV money machine would have a major hiccup as a result. So, they’ll start negotiating with cable. They could shift all NFL games to cable within 3-4 years. It’s not really that far-fetched: CBS, FOX, and NBC — the networks that televise the NFL (ESPN is already a cable channel) — all have cable sports associations (Fox Sports One, CBS Sports Network, NBC Sports Network). No one watches the latter two except for UTEP basketball games and stuff like that, and Fox Sports One is strong and growing, but still relatively new. If those channels suddenly had NFL? Game changer. It should also be noted that Aereo could truly wreak havoc on the NFL model if it stayed on network and the Supreme Court ruled in favor of Aereo:

But the sports leagues lay out a clever way that Aereo could wreak way more havoc. Because all pro football games are broadcast over the air in their local markets, the company could set up antennas across the country and then sell a service allowing subscribers to buy online access to games broadcast anywhere, including those that the NFL reserves for cable stations. By doing this, Aereo could offer a version ofDirecTV’s (DTV) NFL Sunday Ticket without paying the NFL anything.

It should also be noted that the NFL’s deal with DirectTV expires next season, and some have also speculated that YouTube/Google may jump in the fray and offer live NFL games on YouTube (which would be very interesting, and also a bit weird).

The Supreme Court has a pretty aggressive agenda in 2014 — health insurance, Presidential powers, etc. — but Aereo vs. ABC could be bigger than all of them in some ways, especially if it drastically shifts the “how we enjoy entertainment at home” discussion one way or the other.

Ted Bauer

3 Comments

  1. This is just almost entirely incorrect, and certainly melodramatic. Aereo is semi-disruptive to broadcasters’ retransmission fees. (Just semi-disruptive because it doesn’t operate at scale, and cable/satellite/telco providers aren’t likely to be able to adopt the model for large-scale delivery anytime soon.) Aereo is not disruptive at all from a content access standpoint. If you want just over-the-air channels, you could already get them from any local cable provider, for just nominally more than what Aereo charges ($16 where I live, vs. $8 for Aereo — and a large part of the difference is the retransmission fees), or even for free with an antenna, depending on where you live.

    More significantly, if Aereo prevails in court (and based on the law, they should prevail), it is very unlikely that there will be any dramatic impact. In all likelihood, Congress will step in and change the law, to require Aereo to license their retransmission of broadcast channels.

    For those who are interested in understanding the reality of the legal and business issues involved with the Aereo case, see this:

    http://cimc-greenfield.com/2014/01/28/aereo-in-a-nutshell/

    • I appreciate some of the clarifications. I’m not any type of legal scholar, so my context was based primarily on what I had read elsewhere (multiple sources). I do apologize for any inaccuracies, though, and thank you for pointing them out.

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