Analysis: Broadcasters Need to Embrace Innovation Now That Aereo Fog Has Lifted

Broadcast TV station owners were understandably elated Wednesday by the Supreme Court’s decision in the Aereo case.

The legal questions surrounding the startup venture that gave subscribers over-the-top access to local TV signals (as a live stream and for programs recorded on a cloud-based DVR) has been hanging over the broadcasting biz for more than a year. The fight over Aereo gave the company — tiny in comparison to the operations of the plaintiffs — outsized influence over the broadcasting sector.

SEE ALSO: Supreme Court Rules Against Aereo in Victory for Broadcasters

The biggest broadcasters engaged in a battle of principle to protect the sanctity of copyright protection precedents. Aereo’s actual operations, confined to the New York City area and an undisclosed number of subscribers, hardly presented a real and present danger to the health of the Big Four networks.

But Wall Street in particular was twitchy about the threat that Aereo posed to the viability of the retransmission consent fees that have plumped the bottom lines of broadcasters for the past few years. If the court ruled in favor of Aereo, what was to stop MVPDs and over-the-top players from offering the same type of signal-bouncing service without having to pay the retrains freight? Those concerns were reflected in the dip this year in stock prices for major TV station owners, such as CBS Corp. and Sinclair Broadcast Group.

At a time of immense disruption for TV’s old guard, the uncertainty caused by the Aereo case provided a somewhat convenient excuse to forestall activity on the larger issues broadcasters face. Like every other aspect of media and entertainment, the local station business needs to be reinvented to compete in a fast-changing landscape.

With few exceptions, local broadcasters have been slow to embrace the promise of mobile offerings, of catch-up options and authenticated viewing. Disney’s ABC, which led the charge in court against Aereo as the lead plaintiff, deserves credit for blazing a trail with its authenticated WatchNow service allowing live viewing via broadband of its O&Os and some affils. CBS Corp. last year invested in the Syncbak company that aims to enable Aereo-esque mobile delivery of TV station signals within a dedicated market.

But those moves seem to be the tip of the iceberg at a moment when time-shifted viewing and over-the-top offerings are growing apace. It’s surprising that even five years after the transition to all-digital broadcasting, many of the largest station group have yet to program their multicast channel real estate.

Now that the high court has sided squarely with broadcasters, it’s time for the TV stations that enjoy home-field advantage with viewers to deliver on the promise, using the business they fought so hard to protect as a foundation for innovation. That may well mean getting more comfortable with the idea of partnering with emerging platforms vying for TV content, from Apple to Google to Xbox. Otherwise, another Aereo is sure to pop up to fill the void and once again thumb its nose at established copyright law.

Robin Flynn, SNL Kagan research director who has long studied the broadcasting sector, summed up the impact of the court’s ruling on broadcasters and MVPDs. And she added a touch of optimism.

“Today’s Aereo decision protects not only the tens of billions of dollars broadcast networks and TV station owners have invested in programming content, but also the transmission of that valuable sports and video content over the air for the foreseeable future,” Flynn observed. “It does not stifle multichannel operators’ continued strategic imperative to deliver licensed video content to consumers over multiple devices at the time of consumers’ choosing, with the goal of responding to how their subscribers prefer to watch video today. Innovation will no doubt continue in the video space.”

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