Chet Kanojia Aereo 2012
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Cabler turns to digital service as bargaining chip in retrans negotiations with Eye

Aereo founder and CEO Chet Kanojia said that the retrans showdown between CBS and Time Warner Cable gave some “validation” to the notion that the cost of cable to consumers have gotten out of whack.

According to the New York Times, Time Warner Cable  is using Aereo as something of a bargaining chip in the negotiations. If the cable operator’s talks with CBS fail to produce an agreement, and the network is blacked out, it will recommend New York subscribers turn to Aereo. CBS and other broadcast networks are in the midst of litigation against Aereo, challenging the startup digital venture’s service of offering of digital streams of broadcast signals without paying retrans fees to the nets.

At the Fortune Brainstorm Tech conference in Aspen, Colo., Kanojia said that although “we are not going to side with Time Warner or anybody else,” he said that the dispute between CBS and Time Warner Cable is “validation of the fact that the cost structure of the industry is getting to the point where this cabal is questioning” their relationships. He said that it was another example of the “mini-shifts and cracks and fissures emerging in the business model.

Kanojia said that Time Warner Cable did not call him about their plans to recommend Aereo should a blackout occur.

“We are not playing for short-term gain here,” Kanojia said, adding, “The goal for is is not to enter in to someone else’s dispute.”

Aereo is in the midst of an ambitious plans to expand to 22 markets within the next three months. Kanojia said that they would probably miss that target by one or two markets. he was cagey about how many subscribers Aereo has, but predicted a 25% penetration within five to seven years.

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