Aereo Continues to Push Forward

Barry Diller's streaming video service Aereo continues to win its courtroom victories. Last year, a federal judge in New York rejected TV networks' request to prohibit the service from launching its new video-on-demand offering. Today the Second Circuit Court of Appeals has declined to issue an injunction that would have shut down Aereo, the streaming service that delivers broadcast signals to customers willing to pay $8 a month. Meanwhile, according to the Wall Street Journal, the company is bolstering its programming with ATnT, which is talking about packaging high speed Internet service with Aereo’s programming and Dish Network is looking at ways to use Aereo as a way of offering low-cost programing packages to its customers.

“Today’s decision from the Second Circuit Court of Appeals again validates that Aereo’s technology falls squarely within the law and that’s a great thing for consumers who want more choice and flexibility in how, when and where they can watch television,” said Chet Kanojia, Aereo CEO and Founder. “The ruling to uphold Judge Nathan’s decision sends a powerful message that consumer access to free-to-air broadcast television is still meaningful in this country and that the promise and commitment made by the broadcasters to program in the public interest in exchange for the public’s spectrum, remains an important part of our American fabric.”

Broadcasters have argued Aereo violates copyright rules by streaming over-the-air signals to customers so the court decision is a major set-back. Moreover, other pay TV distributors could be prompted to create similar services to avoid paying broadcasters retransmission consent fees. In the U.S. almost $2 billion dollars were paid by TV distributors last year for broadcast programming, up 33% over the prior year according to SNL Kagan. More: Deadline 04/01 - Aereo Exploring Alliances With Pay TV Distributors: WSJ  Also See: SMM Post from 1/13/13 – Aereo: An Industry Disrupter!

UPDATE 04/03/13 - In a surprising move given ongoing legal challenges between the respective services, FilmOn.TV founder and CEO Alki David – the billionaire media entrepreneur – has congratulated the legal team at Internet TV streaming service Aereo on what he describes as its “hugely significant” win in court against the Major Networks… More: AdvancedTelevision 4/03 - FilmOn welcomes Aereo ruling

Aereo - SCOTUS rules in favor of the Broadcasters

Aereo - Time to modify the business plan?

After my recent post about Aereo & the NFL, I felt it was worthy of a follow up on today's Supreme Court decision. I've always seen  Aereo is an industry disruptor but the question remained, was it legal or were they skirting the law? The verdict is in and the Supreme Court, in a 6-3 decision, has ruled that Aereo's technology is indistinguishable from cable systems and publicly performs copyrighted content and that Aereo violated those copyrights by delivering broadcast programming without permission. Barry Diller, whose IAC/InterActiveCorp was the principal financial backer of Aereo, said in a statement that ruling was not a “big (financial) loss for us,” adding, “but I do believe blocking this technology is a big loss for consumers, and beyond that I only salute Chet Kanojia and his band of Aereo’lers for fighting the good fight.” Stock prices for CBS, 21st Century Fox, Disney and Comcast rose on the news of the ruling.  MORE: The Los Angeles Times 06/25/14 -Supreme Court rules against upstart Aereo TV service in copyright case and USA Today 06/25/14 - Supreme Court rules against Aereo in Internet TV fight or The New York Times 06/25/14 - Supreme Court Rules Against Aereo in Broadcasters’ Challenge
  

Aereo: An Industry Disrupter!

Aereo, the ambitious New York start-up that pipes live broadcast television to mobile phones, tablets and Web browsers, has so far been available to customers only in its hometown. Now fresh off of their CES announcement from Chet Kanojia, Aereo’s founder and chief executive where they have recently closed a $38 million round of financing that will be used to roll out its service to 22 additional cities across the country, including Austin, Tex., Boston and Miami, beginning this spring. So how did Aereo strike deals with all of the networks, and every local station in each one of these markets? It seems like an impossible challenge, particularly for a startup but they had a clever solution: They didn’t bother. Instead, they erect an array containing thousands of micro-antennas (see below) in every city. Each Aereo subscriber has exclusive, private access to one antenna. Amazingly enough, this makes it all perfectly legal (from their perspective at least).

Obviously the company has its challenges from broadcasters who are eager to shut the company down, contending that it violates copyright law. We all realize it's a money thing and personally as a cable subscriber paying way too much for monthly service, I know a large amount of my bill goes to broadcasters who give their service away for free to those with an antenna. Why because I choose to have access to cable programming should I now also pay the broadcasters for theirs? They have [broadcast] spectrum. They are required to program in the public interest and to offer it widely for free. This is a David and Goliath fight for sure but for that, I highly respect scrappy Aereo, just for the sheer guts of the undertaking.

TechCrunch's video with Jordan Crook  as he talks to Chet Kanojia, Aereo's CEO and Founder, onstage at CES 2013

Aereo Disrupts NFL's TV Business Model with a favorable Supreme Court Decision

Aereo, the Barry Diller backed company that I've written about in numerous posts on SMM is certainly a hot topic these days.  Since it launched, it has been embroiled in legal battles which have pushed their way through the court system where as early as today the Supreme Court could issue a ruling in the dispute between the broadcast networks and the startup streaming service. Although it more than likely will be some time before the courts ruling may actually come down, the media is a "buzz" about the topic. Yesterday, the Washington Post published an article that claimed that, if Aereo wins, “the foundation of the NFL’s television business could crumble” because “a thriving Aereo could help fans bypass the broadcasters, devaluing their expensive contracts with the NFL.” In my opinion this claim is bias and full of false statements but I am not the final judge that will determine the faith of this industry disrupter. Truth be told, I honestly hope that Aereo if not some spin on it's technology will prevail however, I'm acutely aware of what a big stakes game this is.  

The Little Antenna that could
change the broadcasting industry

Read up on it at: The Washington Post - Cecilia Kang's 06/17/14 - How the Supreme Court’s ruling on Aereo could change how we watch football and also review a good contrasting perspective with Chris Morran' 06/18/14 piece on Consumerist - No, A Supreme Court Victory By Aereo Would Not Crush The NFL. I'll be interested to read your feedback as well as watch how this all plays out.

Aereo's final chapter - Broadcasters Picking its Bones

Aereo is the undisputed leader when it come to my favorite company to write about over the past couple of years. You will remember them as the ambitious startup that aimed to stream live broadcast television and offered cloud based DVR services to subscribers for a small monthly fee. Roll forward to this past Friday, months after the devastating loss they suffered in the Supreme Court, they filed for bankruptcy. Although this seemed to be the final chapter in their short lived history, it doesn’t have to end this way. While the courts ruled that Aereo’s business model ran afoul of copyright law, the underlying technology, which uses tiny antennas to stream video to subscribers, could still be very valuable. The reality is that Aereo only foreshadowed a massive industry shakeup that is changing everything about television.  As more people cut the cord and switch to on-demand services like Netflix and HBO Go, cable television (as we now know it) will slowly die out as will the lucrative retransmission fees they pay the broadcasters. Apparently I'm in good company with my prediction as Reed Hastings CEO Netflix has thrown down the gauntlet to the traditional television business, declaring it will be dead by 2030.

The latest news that has peaked my interest is this weeks comment from their Lawyers stating that there is "plenty of interest in the company’s assets" and asked the bankruptcy judge for an auction to be scheduled for Feb. 17. More: Bloomberg 11/24/14 - Aereo’s Assets Eyed by Possible Bidders, Lawyer Says

Aereo Can Stream in New York for the Foreseeable Future

The U.S. Court of Appeals for the Second Circuit denied a broadcaster request that the full court review a three-judge panel of that court's April decision not to stop Aereo from delivering broadcast signals over the Internet while a lower court considers a broadcaster challenge to the service's legality. The central issue in the Aereo case is whether the start-up’s decision to provide one antenna for every subscriber makes it a legal private transmission under copyright law or, instead, an illegal public broadcast so the broadcasters claim.

Meanwhile Fox Broadcasting isn't taking no for an answer, "We will now review our options, and determine the appropriate course of action," said a statement from Fox. CBS has also vowed to fight the company wherever it launches its service, which is available in New York, Atlanta and Boston (where it's already been sued by Hearst).

Aereo is a well funded startup that is challenging the current broadcasting model. While this ruling is another win for Aereo in its ongoing battle against broadcasters, their time in court is far from over. More on this to come...

DirecTV considers OTA to reduce Programming costs

In 2008 the Sezmi Flexcast video distribution technology was being tested. It's design was revolutionary at the time because of it's combination of the use of antenna and a broadband connection to receive content. The antenna captures the digital signals from the major networks broadcast publicly over the air for free. Unfortunately for the company it never really gained any traction and eventually was purchased by KIT Digital. Interesting news surfaced earlier this week when DirecTV announced that it is considering testing a new set-top that incorporates an antenna allowing customers to pull over-the-air (OTA) broadcast signals, which could allow the satellite giant to avoid paying millions of dollars per year in retransmission consent fees. Patrick Doyle the company's CFO stated that they had used the integrated antenna solution early in its history, before it began offering local broadcast channels via satellite. Once the satellite giant began offering local-into-local broadcast signals on a wide scale basis, the antenna solution didn’t make economic sense.

Business evolves and the economics are changing. Companies like Aereo and look a like Aereo Killer are challenging the broadcasters traditional business model and traditional Satellite & Cable providers are seriously weighing their options. For the past several years retransmission consent and the huge fees that some broadcasters charge have been a growing concern multichannel video programming distributors (MVPD). NBC alone expects to see a 400 percent rise in retransmission revenue this year, which translates into steep cost increases for pay-TV providers, and subsequently their subscribers. According to SNL Kagan, retrans fees could top $6 billion annually by 2018.

DirecTV is not alone in their quest to rein in explosive programming cost increases. Time Warner Cable's CEO recently stated publically that they were diligently watching the Aereo legal challenge and perhaps they would also invest in a technology that could eliminate retrains fee's. At this point it's not clear just how many other MVPD's, are considering options like these. According to an article in Light Reading Cable's 05/16 issue - DirecTV Weighs OTA Tuners. They state that one industry source has only heard similar discussions in international markets, while a second confirms there have been some domestic conversations, but nothing suggesting any near-term action.
 
In any case, no matter which side of the fence you stand on retransmission consent and the revenue stream/programming expense issue, it is rapidly coming to a head.

Is the FCC Redefining Television

The Federal Communications Commission is preparing a proposal which could help the fledgling OTT industry by treating certain online video services like cable and satellite TV providers. The move would help the online services gain cheaper access to major network programming and could allow them to become stronger competitors to the dominant pay-TV providers like Comcast.  Gaining rights to popular channels has been a major hurdle for online TV services. Sony Corp. and Dish Network (as previously reported here) are among the companies considering Web-based services to compete with traditional cable and satellite operators. The big issue and cause for some OTT failures like Intel’s exit from its “OnCue” service, is in securing highly coveted programming from ESPN, NBCU, AMC and others is that the networks typically are owned/controlled by the larger MVPD’s (Comcast, Time Warner, Cablevision).

FCC Chairman Tom Wheeler was asked about the matter yesterday and stated that a proposal is circulating among commissioners “is probably a bit of an overstatement.” Nonetheless the industry analysts are buzzing. “This is a very big deal,” said Richard Greenfield, an analyst for BTIG. “It could pose very significant challenges to the traditional cable TV bundle.” Paul Gallant, with Guggenheim Securities, said in a note today, that broadcasters such as CBS Corp. and 21st Century Fox Inc. would potentially benefit from having more buyers for their programming.

According to an unknown source by Bloomberg, the change would affect online video providers that offer a cable-like programming service on a schedule, and not on-demand services like Netflix, which allows subscribers to watch videos whenever they want. But it could revive the controversial online video service Aereo, which allowed subscribers to watch broadcast TV channels on their computers and Internet connected-TVs.

 

Although for now this may just be chalked up as a rumor, it is one that would have a broad impact on the business as it is today, a  move which could significantly broaden competition in the MVPD market. More: FierceCable 09/30/14 - Rumor mill:Aereo-like platforms may be given program licensing rights by FCC and/or Variety.com09/29/14 - FCC Wants Some Online Providers to be Treated as Cable Operators

Locast vs. the Media Giants

Locast a nonprofit startup service that launched in 2018 which grabs over-the-air channels and streams them free over the internet said late Thursday that the ABC, CBS, Fox and NBC's "sham litigation" against it, is an antitrust conspiracy to drive it out of business and they are colluding to deny consumers over-the-air signals they once committed to make freely available. 

The suit was the first attack against a company that many see as a successor to Aereo (see past stories), a for-profit streaming service that five years ago offered consumers livestreams of broadcast channels for a monthly subscription. The difference between the cases is Locast's nonprofit status. US copyright law has allowed certain nonprofit institutions to grab over-the-air TV signals and retransmit them to nonpaying viewers, such as a university setting up an antenna that can retransmit to students in its dorms.

Locast's first official answer to the copyright suit goes beyond simply rejecting the companies' accusations of copyright infringement to accuse them of collusion and it's bringing Google's YouTube into the fight. Locast stated that executives at YouTubeTV a paid service that streams live TV channels, met with the Big Four broadcasters suing Locast in April. According to Locast, the YouTube executives were told that if YouTubeTV provided access to Locast, then YouTubeTV would be "punished" by the media giants when YouTube renegotiated the licensing deals allowing its streaming service to carry media giants' cable networks.

In full disclosure, although Locast relies on donations from viewers, it accepts money from corporations and recently received $500,000 from AT&T, which also operates the DirecTV satellite service. When a fee dispute blacked out CBS for more than 6.5 million AT&T television subscribers for a few weeks this summer, AT&T encouraged its users to try Locast.

No doubt this story will continue for some time and we look forward to seeing how it ultimately plays out. More:  The Hollywood Reporter 09/26/19 - Locast Accuses the Major Broadcasters of Antitrust Violations and The New York Times 09/27/19 - Locast, a Free Streaming Service, Sues ABC, CBS, NBC and Fox

Reed Hastings - 10 Reasons why Internet TV will continue to gain popularity

After Netflix’s blockbuster earnings sent its stock soaring yet again earlier this week, Reed Hastings, the company’s CEO made a bold prediction: TV as we know it is coming to an end.  “As Internet TV grows from millions to billions, Netflix, HBO, and ESPN are leading the way,” Hastings wrote in an 11 page manifesto about Netflix’s future. “Internet TV will replace linear TV.”

He's obviously not sharing his perspective alone because numerous networks and stations have agreed with his views on the limitations of linear television and have launched their own apps. Although Hastings cites WatchESPN, HBO GO and the BBC iPlayer as leaders in this arena, we must also acknowledge the industry disrupters in streaming television technology; Aereo and the Dish's Hopper. Each of these also have huge potential to cause a dramatic shifts in the TV business as it heads into the future. Case in point at the opening of this year’s NAB when News Corp (FOX) COO Chase Carey threatened to take their programming off the broadcast airwaves and convert to cable channels. This was followed later by Univision and later CBS. While viewed largely as saber-rattling, the idea that the networks could be converted into cable channels gained attention in the television world because such a move would have wide-reaching implications for viewers and station owners. The point may be mute if Hastings predictions hold true and we move from broadcast and cable to an unbundled & streamed viewing environment.
Feel free to look at his letter to shareholders earlier this week and the 10 reasons he believes why Internet TV will continue to gain popularity, concluding that “over the coming decades and across the world, Internet TV will replace linear TV. Apps will replace channels, remote controls will disappear, and screens will proliferate”.

Let me share them with you here:

1. The Internet will get faster, more reliable and more available
2. Smart TV sales will increase and eventually every TV will have Wifi and apps
3. Smart TV adapters (Roku, AppleTV, etc.) will get less expensive and better
4. Tablet and smartphone viewing will increase
5. Tablets and smartphones will be used as touch interfaces for Internet TV
6. Internet TV apps will rapidly improve through competition and frequent updates
7. Streaming 4k video will happen long before linear TV supports 4k video
8. Internet video advertising will be personalized and relevant
9. TV Everywhere will provide a smooth economic transition for existing networks
10. New entrants like Netflix are innovating rapidly

Update 05/01 - A view from Michael Grotticelli at Broadcast Engineering - Netflix unveils plan to replace broadcast television