Podcast Audio | Posted by Phil Leigh on July 23, 2012
It’s increasingly evident a growing number of Cable TV subscribers want to discontinue Cable service. They object to the high monthly fees required for fixed “packages” of video programming. Instead, they want to save money by watching only their favorite programs from a combination of (1) broadcast television, and (2) fee-based Internet services such as NetFlix, Hulu, and Amazon Prime.
Although broadcast television is free to individual TV-set owners with their own antennas, reception is often unsatisfactory in dense urban markets like Manhattan. About sixty years ago the problem was circumvented by the erection of community antennas, typically on the rooftops of large apartment buildings. In point of fact, today’s Cable TV companies are evolved forms of community antenna operators who were originally known as the CATV companies from the acronym for Community Antenna TV.
For many years TV broadcasts were delighted to have CATV distribute clear signals to their subscribers because it enlarged the TV audience. Larger audiences translated to higher advertising rates for broadcasters. There was no competition from Cable programming networks like ESPN, CNN, and AMC. Consequently, the three major broadcasters were generally satisfied with the overall expansion of TV audience that CATV operators provided.
However, after the advent of Cable programming, “Cable-only” networks such as CNN and ESPN were paid monthly fees in exchange for programming. In time broadcasters began to lust after such fees and presently collect a significant amount of programing compensation directly from Cable and Satellite operators. But Barry Diller threatens to change that.
After decades of outstanding success at Paramount Pictures and Fox Network, since the turn of the century Diller has focused on Internet ventures. His latest scheme is a new broadcast television distribution model that delivers broadcasts as a nearly simultaneous streamed service over the Internet. Diller believes his approach avoids copyright infringement and therefore does not require that he pay programming fees. His new company is named Aereo. It is offering residents of Manhattan all of the local broadcast stations as a streamed Internet service for $12 monthly. The service also provides DVR functionality.
Aereo’s planned method of infringement avoidance is to “rent” each subscriber a unique pair of antenna elements from the centrally located array geographically positioned within the city at a place where reception is good. The array is radically different than conventional TV antennas. Each pair of subscriber-assigned antenna elements is only about the size of a dime. Thus, a great many subscribers can be served from a single array location. The following YouTube video describes how it works.
Not surprisingly the broadcasters argue that the Aereo array is nothing more than a “smoke-and-mirrors” way of evading classification as a community antenna. Earlier this month a District Court Judge declined to invoke an injunction as requested by the broadcasters. She reasoned that the element-pairs were unique to each subscriber, even if assigned dynamically as needed. The broadcasters have already announced that they will appeal her ruling.
A legal analysis of the ruling is provided in today’s audio podcast with Jim Burger who is a copyright attorney with Dow, Lohnes in Washington, D. C.
Jim perceptively notes that if Aereo is sustained upon appeal, the precedent could have huge implications for broadcasters, satellite operators, and the CATV industry. For example, the Cable companies could replace their “community antennas” with Aereo-like arrays thereby enabling them to discontinue programming fees to all broadcast stations. It could also adversely affect the Nielsen audience numbers, because Nielsen does not include Internet streams as part of a TV program’s audience. A smaller Nielsen audience would translate to lower advertising rates.
While an initial decision to decline an injunction against Aereo does not mean Aereo has won its case, it does mean that it will stay in the business presently. It also implies that Aereo’s legal arguments may be stronger than broadcasters had hoped.