Broadcast Networks Bring Out Big Guns Against Aereo

by Jonathan Berr | October 11, 2013 9:29 am

Broadcast Networks Bring Out Big Guns Against Aereo

Broadcast networks are taking one last shot at stopping the spread of Barry Diller’s Aereo service: Petitioning the U.S. Supreme Court.

To use a football metaphor, this is the ultimate Hail Mary pass. The media companies are down by a score, trapped on their own 1-yard line with 10 seconds to go in the game.

Broadcasters have cried foul over Aereo ever since it was launched it March 2012, accusing it of distributing their shows without a license. The service uses dime-sized digital antennas to let users to stream signals for a fee of $8 per month.

It’s not surprising, of course, that the kings of content — The Walt Disney Co. (DIS[1]), Comcast (CMCSA[2]), CBS (CBS[3]) and Twenty-First Century Fox (FOXA[4]), which own ABC, NBC, CBS and Fox respectively — are not pleased with Aereo.

But you don’t have to be a constitutional scholar to know that the odds of the broadcasters even making onto the Supreme Court’s docket are slim, given the small number of cases the justices decide to review.

And even if the justices decide to hear the case, it’s far from clear that the broadcast networks will prevail.

While a lower court in California ruled against the service, an appeals court has yet to issue its ruling. Beyond that, though, Aereo got the thumbs up against a federal district and appellate panel in New York. It also won a ruling Boston recently, which allows the service to be used in all of New England. And similar victory came in the nation’s capital.

So as GigaOm aptly summed it up[5]:

“The Supreme Court will likely wait to hear the petition until next time around. In the meantime, Aereo and the broadcasters will continue to skirmish on a region by region level. This week, the TV companies sued in Utah — the outcome will determine whether they can shut down Aereo in seven more western states, in addition to the ones they’ve blacked out already.”

That’s a nerve-racking game for the broadcast networks — especially as Aereo continues to expand. The service is now available[6] in New York City, Boston, Atlanta, Salt Lake City, Miami, Dallas and Houston. But more cities are set to come on board throughout 2013 and 2014.

“This year, our focus has been on growing our footprint across the country,” said CEO Chet Kanojia in a recent press release. “It’s been an exciting year for the Aereo team as we’ve expanded beyond the east coast and into the south and west.”

No wonder Les Moonves, the loquacious CEO of CBS, bluntly threatened[7] to “go after them in the courts.” He also added: “If that doesn’t work there are other remedies. There are financial remedies; there are congressional remedies.”

On top of that, News Corp (now 21st Century Fox) Chief Operating Officer Chase Casey[8] threatened to take Fox off the public airwaves earlier this year if Aereo prevails. Once again, Fox is one of the plaintiffs in the suits challenging Aereo.

But moving broadcast networks to cable may not be as easy as it sound. Audiences could easily shrink if fewer people are able to tune it — and that would likely shrink advertising revenue along with it.

It’s also unclear how the broadcasters could say they are operating in the public interest if not everyone can view their signals. Then there’s the question of what would happen to the networks’ own television stations. Would they continue to be offered? Would their audiences be cannibalized?

Those factors point to one simple reality: The Supreme Court petition is a huge deal for broadcast networks — and possibly the last chance they have at thwarting this strengthening foe.

Jonathan Berr does not own shares of the listed stocks. Follow him on Twitter@jdberr and at Berr’s World.[9]

Endnotes:
  1. DIS: http://studio-5.financialcontent.com/investplace/quote?Symbol=DIS
  2. CMCSA: http://studio-5.financialcontent.com/investplace/quote?Symbol=CMCSA
  3. CBS: http://studio-5.financialcontent.com/investplace/quote?Symbol=CBS
  4. FOXA: http://studio-5.financialcontent.com/investplace/quote?Symbol=FOXA
  5. GigaOm aptly summed it up: http://gigaom.com/2013/10/09/broadcasters-to-ask-supreme-court-for-early-aereo-ruling/
  6. service is now available: https://aereo.com/coverage
  7. bluntly threatened: http://www.deadline.com/2013/04/les-moonves-cbs-cable-threat-aereo-lawsuit/
  8. Chase Casey: http://www.deadline.com/2013/04/chase-carey-fox-pay-tv-aereo/
  9. Berr’s World.: http://www.jonathanberr.com/

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