& cplSiteName &

Aereo CEO Trashes Pay-TV Model

Alan Breznick
1/14/2014
50%
50%

Despite what the major broadcasters have to say, Aereo CEO Chet Kanojia doesn't believe that the legal fight over his company's online streaming of local TV signals has anything to do with retransmission consent or copyright laws. Rather, he thinks the battle is really over control of TV signal distribution and the future of the bloated cable bundle.

With the courtroom showdown over the business model of Aereo Inc. now headed for US Supreme Court arguments sometime this spring, Kanojia argues that the case has absolutely "no implications for retransmission-consent." Even if the high court rules decisively in Aereo's favor, he sees little chance that the broadcast industry's growing stream of retransmission-consent revenue from cable operators and other pay TV providers will come to a screeching halt. Nor does he see much chance that cable companies will start installing similar dime-sized antennas on millions of subscriber rooftops to do a massive end-run around the nation's copyright protection laws and retransmission-consent rules. (See Aereo Headed for Supreme Court? and Aereo Fight Heats Up in DC.)

"This argument is not about retransmission consent," he insisted, speaking at the Citi Global investment, Media & Telecommunications conference in Las Vegas last week. "What is being questioned is: Can I have an antenna as a consumer…? There's no prohibition against third parties making money on TVs and antennas."

Kanojia contends that broadcasters really want to shut down his company's premium service, which charges subscribers $8 to $12 a month for a mix of local stations and cloud-based DVR service, because they don't want to loosen their still-tight control over program distribution. Recalling that broadcasters once fought the same kinds of legal and regulatory battles against cable operators, VCR makers, DVR suppliers, and other proponents of what were then considered new distribution technologies, he noted that they lost in just about each case, but then ended up making out like bandits in the marketplace.

"The history of this industry is that they're driven by control," he said. "The reality is that they have prospered under every one of these circumstances."

If anything, Kanojia believes that Aereo could prove to be "a net benefit for broadcasters" by bringing their programming to more homes and opening up possibilities for specially targeted advertising. Rather than pay unnecessary retransmission-consent fees, he said, these are the ways that Aereo can truly help broadcasters reap more revenue.

"Of course, they should be compensated" for their signals, he said in response to questioning from financial analysts. "We'd be happy to create more technologies to help broadcasters do targeted advertising."

In addition, Kanojia argues that broadcasters, programmers, and other content providers want to shut down Aereo because they view it as some kind of threat to the traditional pay TV bundling model. Under that tried-and-true model, cable operators and other video service providers package dozens and even hundreds of channels for subscribers for one monthly price, rather than let customers choose and pay for just the handful of channels that they actually watch. This model, which has thrived for decades, has spurred the development and deployment of scores of niche channels that generate lucrative carriage fees and advertising revenues even though they're lightly viewed.

But, with the rise of online streaming services like Netflix Inc. (Nasdaq: NFLX), YouTube Inc. , Hulu LLC , Amazon.com Inc. (Nasdaq: AMZN), and even Aereo, and the emergence of media streaming boxes and bundles from such other new players as Apple Inc. (Nasdaq: AAPL) and Roku Inc. , increasingly tech-savvy consumers no longer have to buy the big, bloated programming bundles to get the content they desire. So the future of many of the less popular channels suddenly looks much cloudier than it did before.

"I don't think there's a whole lot of business in selling 500-channel packages of video services to people who don't want them," Kanojia said. "I don't think the future is selling 50 Viacom channels to people."

With cable broadband subscriber totals now rapidly catching up to cable video customer totals for the first time ever, Kanojia may well be right -- and maybe that's not such a bad thing.

— Alan Breznick, Cable/Video Practice Leader, Light Reading

(9)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View        ADD A COMMENT
mendyk
50%
50%
mendyk,
User Rank: Light Sabre
1/17/2014 | 6:56:53 PM
Re: Let's twist
If NBC decides to run infomercials over the air while reserving The Big Game for delivery over paid video services only, I don't think political powers could do anything about that.
albreznick
50%
50%
albreznick,
User Rank: Blogger
1/17/2014 | 6:12:58 PM
Re: Let's twist
Yep, I can definitely see that happening. Would just hate to see it. Will be interesting to see if the political powers would allow that. Right now I think they still wouldn't. But that could change.   
mendyk
50%
50%
mendyk,
User Rank: Light Sabre
1/16/2014 | 5:51:59 PM
Re: Let's twist
"Going premium" in this context would mean having the most valuable content offered only through video service providers, which is how the vast majority of viewers get their network programming now. OTA service could well be relegated to low-end content, which of course there is plenty of.
albreznick
50%
50%
albreznick,
User Rank: Blogger
1/16/2014 | 5:47:06 PM
Re: Let's twist
Definitely could hapopen. Do you think even the Super Bowl and World Series will end upgoing premium at some point? Those would be sad days for America, at least the sports-loving partof it.   
mendyk
50%
50%
mendyk,
User Rank: Light Sabre
1/15/2014 | 3:05:43 PM
Re: Let's twist
Programming networks (both over-the-air and cable) will do whatever they have to to minimize any damage to their revenue bases and to make sure that they get the biggest cut of revenue possible. The idea of sending premium content over the air so that a third party can capture and resell it will not fly. I will not be surprised if the networks (who don't own all that many OTA stations outright anymore) start offering premium content through fee-paying video networks only, leaving second-tier content for OTA delivery.
albreznick
50%
50%
albreznick,
User Rank: Blogger
1/15/2014 | 11:50:20 AM
Re: Let's twist
Not right away, anyway. But I do think the traditional pay TV bundle is headed for a fall in the not-too-distant future. More and more folks will seek to opt out of these bloated bundles to get just the channels they want, and they will increasingly be able to do so. What's your vision?    
mendyk
50%
50%
mendyk,
User Rank: Light Sabre
1/14/2014 | 4:28:02 PM
Re: Let's twist
Do you think anything will change?
albreznick
50%
50%
albreznick,
User Rank: Blogger
1/14/2014 | 4:13:07 PM
Re: Let's twist
Of course, it's always abouty the money. But I do think Kanojia has a point that it's also about control. And I agree with him that the wehole retransmission-consent regime with pay TV providers won't collapse if Aereo wins its case.    
mendyk
50%
50%
mendyk,
User Rank: Light Sabre
1/14/2014 | 3:41:16 PM
Let's twist
I thought A-Rod's lawyers had set a new standard for bendable logic. "It's not about the money" almost always means only one thing.
More Blogs from Breznick Unbound
In a questionable call, the cable trade group is planning to hold its INTX show next year at the same time as NAB's big trade show in Las Vegas.
Light Reading and NCTC are teaming up to create and market webinars, video interviews and other multimedia content for smaller and independent cable operators.
Now that Sony has launched a 4K movie streaming service and AT&T/DirecTV is broadcasting golf and baseball action in UHD, is 4K video ready to go prime time?
Did CableLabs jump the gun by announcing its Full Duplex DOCSIS 3.1 initiative so early? Some senior cable technologists think so, and so do I.
LR's cable next-gen tech event in Denver this week will tackle prospects for DOCSIS 3.1, Full Duplex DOCSIS and other key industry initiatives.
From The Founder
The independent evaluation of Nokia's key virtual network functions (VNFs) was a defining moment for the Finnish giant.
Flash Poll
Live Streaming Video
Charting the CSP's Future
Six different communications service providers join to debate their visions of the future CSP, following a landmark presentation from AT&T on its massive virtualization efforts and a look back on where the telecom industry has been and where it's going from two industry veterans.
LRTV Custom TV
Energy 2020: Creating Unique Standards for Cable's Unique Networks

6|28|16   |   09:30   |   (0) comments


Cable's unique network requirements require a specific set of standards for operators to increase power efficiency, according to Dan Cooper, vice president of critical infrastructure for Charter Communications and chair of the SCTE/ISBE Standards Program's Energy Management Subcommittee, and Ian Oliver, managing director of the Trenchant Group and a member of the ...
LRTV Custom TV
It's Prime Time for NFV

6|28|16   |     |   (0) comments


At BCE 2016, Ray Watson of Masergy talks about the adoption of NFV.
LRTV Custom TV
Leading the NFV Capabilities

6|28|16   |     |   (0) comments


At BCE 2016, Tim Naramore talks about Masergy's role in deploying NFV.
LRTV Custom TV
Private Company of the Year - Affirmed Networks

6|27|16   |     |   (0) comments


At BCE 2016, Steve Saunders speaks to Hassan Ahmed about Affirmed's success.
LRTV Custom TV
Energy 2020: Growing Services, Not Consumption

6|24|16   |   07:18   |   (0) comments


Management of power requirements needs to be a key consideration as cable operators deploy new services, says Dan Cooper, vice president of critical infrastructure for Charter Communications and chair of the SCTE/ISBE Standards Program's Energy Management Subcommittee. In this video, Cooper discusses the importance of cable operators and technology partners ...
LRTV Huawei Video Resource Center
Huawei & TDC First to Launch DOCSIS 3.1 Trial in Europe

6|24|16   |     |   (0) comments


To meet the rising demands for high-speed broadband and to tackle fierce competition for 1.5 million household, TDC wanted to upgrade its network to use the latest technology. Using Huawei's DOCSIS 3.1 solution, TDC is now able to offer gigabit speeds to its customers.
LRTV Documentaries
OPNFV Summit: Key Takeaways

6|22|16   |   03:28   |   (0) comments


MANO shortfalls, an increasingly bloated open source ecosystem and the cultural challenges for network operators were among the key takeaways from the OPNFV Summit in Berlin.
LRTV Huawei Video Resource Center
Bringing Ultra Broadband to the South Pacific

6|22|16   |   7:55   |   (0) comments


At Singapore's UBBS 2016 summit, Light Reading speaks to Lim Chee Siong, Huawei's CMO in the South Pacific Region.
LRTV Custom TV
Juniper's NFV Platform

6|22|16   |     |   (0) comments


A telco cloud is a key enabler for service providers to deliver virtualized services to their customers. Juniper has a differentiated approach with an open and comprehensive NFV platform to build the cloud of the future for multiple use cases.
Women in Comms Introduction Videos
Infinera: The Glass Ceiling's Been Broken

6|22|16   |   4:34   |   (0) comments


Shannon Williams, an engineer by trade and now the director of sales for Infinera's major accounts, draws confidence from being a female in a male-dominated industry and hopes other women will too as industry dynamics swing in our favor.
LRTV Custom TV
RAD Demonstrates SD-WAN Functionality at BCE 2016

6|22|16   |     |   (0) comments


In conjunction with Versa Networks, RAD demos a joint solution for SD-WAN implementation. The solution uses RAD's ETX-2i, a vCPE platform integrating a powerful IP and Carrier Ethernet NID/NTU with a field-pluggable x86 NFV module that runs Versa's FlexVNF for SD-WAN functionality. The demo implements SD-WAN over a simulated service provider footprint by deploying ...
LRTV Custom TV
Radware on Virtualizing Network Security

6|21|16   |     |   (0) comments


Radware's Michael O'Malley highlights the benefits for service providers of virtualizing network security.
Upcoming Live Events
September 13-14, 2016, The Curtis Hotel, Denver, CO
November 3, 2016, The Montcalm Marble Arch, London
November 30, 2016, The Westin Times Square, New York City
December 6-8, 2016,
May 16-17, 2017, Austin Convention Center, Austin, TX
All Upcoming Live Events
Infographics
A new survey conducted by Heavy Reading and TM Forum shows that CSPs around the world see the move to digital operations as a necessary part of their overall virtualization strategies.
Hot Topics
'Brexit' Vote Hits BT, Vodafone
Iain Morris, News Editor, 6/24/2016
AT&T Settles on LTE for Cellular IoT
Dan Jones, Mobile Editor, 6/22/2016
Google Fiber Buys Webpass in Wireless Play
Iain Morris, News Editor, 6/23/2016
Netflix Queues Up Video Downloads
Mari Silbey, Senior Editor, Cable/Video, 6/23/2016
AWS CEO: Enterprise Data Center Is Doomed
Mitch Wagner, West Coast Bureau Chief, Light Reading, 6/21/2016
Like Us on Facebook
Twitter Feed
BETWEEN THE CEOs - Executive Interviews
At the BCE 2016 show in Austin, ECI Telecom CEO Darryl Edwards tells Light Reading founder and CEO about the Elastic Network concept and the company's NFV and cybersecurity developments.
Mark Dzuban, president and CEO of SCTE/ISBE, sits down with Steve Saunders in Light Reading's New York office to discuss the society's Energy 2020 campaign, including its mission to benefit the environment, enable economic benefits and the key challenges facing cable operators wanting to reduce energy consumption.
Animals with Phones
Live Digital Audio

Our world has evolved through innovation from the Industrial Revolution of the 1740s to the information age, and it is now entering the Fourth Industrial Revolution, driven by technology. Technology is driving a paradigm shift in the way digital solutions deliver a connected world, changing the way we live, communicate and provide solutions. It can have a powerful impact on how we tackle some of the world’s most pressing problems. In this radio show, Caroline Dowling, President of Communications Infrastructure & Enterprise Computing at Flex, will join Women in Comms Director Sarah Thomas to discuss the impact technology has on society and how it can be a game-changer across the globe; improving lives and creating a smarter world. Dowling, a Cork, Ireland, native and graduate of Harvard Business School's Advanced Management Program, will also discuss her experience managing an international team focused on innovation in an age of high-speed change.