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November 21, 2014
Aereo has finally hit the skids.
In a public letter on the Aereo Inc. website, CEO Chet Kanojia announced that the streaming video company has now filed for Chapter 11 bankruptcy. The move comes five months after Aereo halted operations in response to a US Supreme Court ruling that favored broadcasters over the online startup. Prominent investor Barry Diller called it quits once the Supreme Court decision came down, but Kanojia kept trying to work out a way forward for the company. (See Aereo Presses Pause… for Good?)
Unfortunately, time and money appear to have run out. In addition to filing for Chapter 11, Aereo has appointed Lawton Bloom of Argus Management Corporation to serve as Chief Restructuring Officer during the upcoming bankruptcy proceedings.
Aereo is not the first company to fail at overturning the established order of the pay-TV industry. Like Sezmi, Boxee and others before it, Aereo thought it could successfully compete against incumbents by taking advantage of free broadcast TV and innovating on the user experience. It garnered huge support in the media and from fans, but ultimately couldn't prevail against the legal system… or against deep-pocketed programmers with significant future revenues at stake.
The fall of Aereo was predicted by many. But, despite the broadcasters' win against the startup, it looks like not even industry incumbents can stem the tide of change that's coming to the TV business. Case in point, pay-TV providers are now experimenting with cheaper, slimmed-down content bundles. Verizon Communications Inc. (NYSE: VZ) has introduced a new $60 package combining broadband with local broadcast channels, HBO, Showtime and Netflix. (Hat tip, Telecompetitor.) Comcast Corp. (Nasdaq: CMCSA, CMCSK) and Time Warner Cable Inc. (NYSE: TWC) have offered service tiers combining broadband with a limited TV channel line-up since 2013. And Dish Network LLC (Nasdaq: DISH) plans to launch a baseline, sports-focused over-the-top offering early next year. (See Time Warner Shakes Up the Bundle and OTT Alert: Dish Still Aiming for 2014.)
There are also numerous à la carte services in the works, including online offerings from programmers like CBS Corp. (NYSE: CBS), Home Box Office Inc. (HBO) and Showtime Networks Inc. CBS's new online service is already live, and many of the other new options are expected to debut in 2015. (See CBS Takes OTT Plunge.)
Want to know more about OTT video? Check out our dedicated OTT content channel here on Light Reading.
And finally, the Federal Communications Commission (FCC) -- partly at Aereo's urging -- is looking at reclassifying certain online video companies as multichannel video programming distributors (MVPDs). If that happens, it could create substantial new opportunities for competition, bringing new rivals to the existing ecosystem, and new options for consumers who have railed against the cost of cable TV for years. (See Wheeler Gets Down With OTT.)
In the end, Aereo didn't come out on top, but it did open up a very public debate about how the pay-TV industry should evolve. If this is the last chapter for Aereo, there are now many others ready to carry the story on.
— Mari Silbey, special to Light Reading
Senior Editor, Cable/Video
Mari Silbey is a senior editor covering broadband infrastructure, video delivery, smart cities and all things cable. Previously, she worked independently for nearly a decade, contributing to trade publications, authoring custom research reports and consulting for a variety of corporate and association clients. Among her storied (and sometimes dubious) achievements, Mari launched the corporate blog for Motorola's Home division way back in 2007, ran a content development program for Limelight Networks and did her best to entertain the video nerd masses as a long-time columnist for the media blog Zatz Not Funny. She is based in Washington, D.C.
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