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Last Chapter (11) for Aereo

Mari Silbey

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

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11/28/2014 | 9:13:08 AM
Re: Media frenzy
"Yeah, I agree again. Consumers keep complaining about price and some of the worst customer service in the industry, yet they keep paying for it. I think many of them may want to read more books. Seems to be a belief you simply can't live without television, which obviously is no longer true in the Internet age...(live sports being perhaps the biggest issue cordcutters face)."

If consumers' wishes aren't fulfilled then obviously they will be moving to different channel providers. Its a sad, but predictable day for Aereo.
11/26/2014 | 10:32:18 AM
sad day for broadcast industry
Its a sad day for TV broadcast industry. Its a sector that has not seen any real innovation for last so many years. High tariffs, poor customer service, rigid payment models, oligopolistic industry structure, artificial legal barriers .. its a sector bound to be disrupted by internet. Sooner or later. It could not be Aero. It would be some other company.
11/24/2014 | 9:21:21 AM
Re: Media frenzy
Yeah, I agree again. Consumers keep complaining about price and some of the worst customer service in the industry, yet they keep paying for it. I think many of them may want to read more books. Seems to be a belief you simply can't live without television, which obviously is no longer true in the Internet age...(live sports being perhaps the biggest issue cordcutters face).
11/24/2014 | 9:15:16 AM
Re: Media frenzy
Yes -- there's more than enough blame to go around, including with customers who've put up with unnecessary price inflation for years. Heavy Reading has surveyed U.S. video service subscribers a number of times, and we found that as much as customers resent the way they are treated by video service providers, they were more than likely to continue in what seems to be an abusive relationship. Partly that has to do with lack of options, which is slowly changing now. But there's also a kind of apathy -- most people just want to watch TV and not spend any time creating their own video packages.
11/24/2014 | 8:53:17 AM
Re: Media frenzy
Absolutely true about broadcasters. Though cable operators are no saints here -- they too are burying all manner of fees below the line, and consistently raise rates as well for DVR rentals and other services (like paying your bill in person). Together broadcasters and cable operators are contributing to soaring bills, even if programming costs (sports in particular) carry the brunt of the blame.
11/24/2014 | 8:34:46 AM
Re: Media frenzy
Video service providers have been taking almost all the blame for price hikes, which is more than understandable given their past behavior. But over the past five years or so, the real culprits have been the content conglomerates (including the broadcast networks), which keep raising their license fees. The situation has devolved to something not unlike the relationship between drug dealers and their clientele -- killing off the customer will be bad for business.
11/23/2014 | 2:01:41 PM
Re: Media frenzy
I think that "championing" was for somebody, somewhere to break up the logjam that is the traditional, very expensive (and getting more expensive by the year) traditional cable bundle. 2015's going to be interesting on that front as we're finally going to see a flood of more flexible OTT offerings from Dish, Verizon, Sony, and others...
11/21/2014 | 3:18:48 PM
Media frenzy
It's ironic (if in fact it's true) that the media was championing Aereo, since Aereo's model was based on unauthorized repackaging of content from media companies.
Mitch Wagner
Mitch Wagner
11/21/2014 | 2:50:46 PM
Did Aereo open debate, or was it simply riding consumer demand? 

And given that the cable companies and courts squashed it flat, I wonder whether we can say Aereo has any legacy at all. And that's unfortunate. I was rooting for them to win. It seemed like a great service. 
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