Aereo CEO: Broadcasters Would Face Policy

Internet streaming startup chief predicts backlash if nets ‘disenfranchise’ consumers who use antennas

Aereo CEO Chet Kanojia is predicting an audience and policymakers backlash if broadcasters make good on threats to pull programming off free-to-air TV channels because of his company’s Internet streaming service.

“I won’t go into hypotheticals… but the real question is a consumer question. Can you disenfranchise 54 million consumers?” Kanojia said, speaking at the Ad Age Digital Conference in New York on Wednesday. “There is going to be a real question across the board.”

Kanojia cited National Assn. of Broadcasters figures from June, based on a study by GfK Media, that 54 million Americans rely on antennas for TV. Other estimates for broadcast-only homes are much lower: Nielsen estimates 11.3 million households watched only free-to-air TV in the fourth quarter of 2012.

Broadcast companies are suing Aereo, which pulls down over-the-air content via an antenna the size of a dime, to stream over the Internet to various devices. The startup, whose major backer is Barry Diller, has won two court victories denying requests to shut it down.

Last week at the NAB Show in Las Vegas, News Corp. president and COO Chase Carey said that if Aereo ultimately wins the case, Fox will consider turning its network into a cable service.

“It’s not a path we’d love to pursue,” Carey said. “But we’re not going to sit idly by and let people steal our content.” Other broadcasters voiced their support of the position.

On Tuesday, Fox and other broadcasters petitioned for an en banc hearing of the 2nd Circuit Court of Appeals for a rehearing on the latest decision denying their request for an injunction blocking Aereo.

Responding to comments by Carey and others, Kanojia said, “The basic logic is these businesses were built on public spectrum… Somebody is going to take advantage of that and provide value to the consumers.”

Aereo’s legal position is that it simply operates a new type of antenna on behalf of customers, who are entitled to free TV under the government’s spectrum licenses with broadcasters. Kanojia said he was confident that Congress and other policymakers “understand the value of competition and understand value of consumer protection.”

Aereo provides a service in the New York metro area and plans to expand to 22 more markets in 2013, extending as far west as Salt Lake City. The startup has not disclosed how many subs it has signed up.

The traditional cable TV bundle is nearing a breaking point, Kanojia said, and the dissolution of that model will happen independent of Aereo specifically. “We’re a very small, not material factor in this equation today,” he said.

Consumers are discovering they can piece together over-the-top services like Netflix, Hulu, iTunes and Aereo — and shell out far less than they currently do for pay TV. “Unless you’re an absolute ESPN fanatic… the combination of two or three of these things makes a lot of sense,” Kanojia said.

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