NBCU: Aereo threatens broadcast business model

Barry-Diller-backed TV platform Aereo, which allows paying customers to record and watch over-the-air television stations online, could destroy the economic model behind television, according to a court filing from NBCUniversal

The Internet TV service is being sued by all of the major television broadcasters in federal court in New York, where the service was launched mid-March. Matt Bond, NBCUniversal executive vice president for content distribution, claimed that Aereo could alter how cable and satellite companies handled traditional TV stations. According to Bond’s sworn declaration, the platforms could receive TV stations via antennae without the need to retransmit them from a central location, which currently allows TV stations to charge retransmission consent fees.

“It makes little economic sense for cable systems and satellite broadcasters to continue to pay for NBCU content on a per-subscriber basis when, with a relatively modest investment, they can simply modify their operations to mirror Aereo’s ‘individual antenna’ scheme and retransmit, for free, over-the-air local broadcast programming,” said Bond, suggesting that cable companies had already considered such a model.

In March, Twentieth Century Fox, Fox Television, Univision, PBS, two local New York TV stations, ABC, Disney, CBS, NBC-Universal, Universal Network Television, and Telemundo sued Aereo for copyright infringement. Bond’s filing, together with similar declarations from fellow broadcasters,is the first formal announcement in the process.

“In sum, what Aereo is doing by simultaneously transmitting Fox telecast on the Internet is competing with Fox using Fox’s own content, said Sherry Berman, senior vice president of distribution strategy and development at Fox Cable Network Services.

Appearing before the Senate Commerce Committee in April, Diller denied that the service was illegally re-selling content. “What we have is a technological platform,” he suggested.

A 2008 ruling said that Cablevision’s Internet DVR service didn’t infringe on copyrights, but the broadcasters, in a separate filing, suggest the case only addresses ‘time-shifting’, rather than retransmission of over-the-air broadcasts.

In their filing, the broadcasters said there was no basis for reading Cablevision as applicable to real-time retransmissions “simply because Aereo’s ‘device or process’ employs a buffer copy and a streaming server”.

Bond suggests that allowing Aereo to exist could lead to widespread cord-cutting, which could undermine cable television revenues as well as broadcast. “Once those subscribers migrate from traditional MVPDs (multichannel video programming distributors), there is no guarantee they will come back, even if Aereo’s service ultimately is found to be illegal at trial,” he warned.

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