Seems they’re considering just that — with Time Warner Cable weighing the possibility of buying the Barry Diller-backed streaming video company — Bloomberg reports today, citing unnamed sources. Aereo uses thousands of tiny antennas to pick up local TV signals that it streams to its subscribers without paying broadcasters a dime. If the cable and satellite companies followed through, it could create a nightmare for broadcasters. TV station owners likely will collect $3B this year from cable and satellite company retransmission consent payments, and the amount is expected to double during the next five years. By 2015 the payments could account for 24% of CBS’ cash flow, 11% of Fox’s, and 3% of Disney’s, Guggenheim Partners’ Michael Morris predicted this week. Much of that revenue could evaporate if cable and satellite companies replicated Aereo’s model. No wonder the major TV station owners have asked several courts, including the U.S. Supreme Court, to rule that the service infringes on their copyrights. (Aereo says it merely leases consumers the kind of equipment they could use to watch and stream TV at home for free.)
But there are a lot of bridges to cross before cable and satellite companies could pose a serious threat. I doubt they’d make a move until they know how Aereo fares in court. Even if it wins, broadcasters have warned they they might do an end-run around the service by taking their best shows off the airwaves — making them just available on cable — so they can keep collecting monthly fees. It also might be difficult to create a copycat service that doesn’t infringe on one of Aereo’s patents. The company’s CEO, Chet Kanojia, told me early this year that he doubts distributors would try to cut off retransmission payments. “They’re all part of families,” he said. “ABC has ESPN. There’s all this intermingled stuff. Our belief is that that’s not what the future is.”
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