Aereo is a mouse of a company, but it’s frightening a lot of Big Media elephants. After launching in New York nearly a year ago, the service — which streams broadcasters’ over-the-air signals to subscribers who typically pay $8 a month — just announced an ambitious plan to expand to 22 additional cities this year with $38M in Series B funding led by Barry Diller’s IAC and Highland Capital Partners. It’s also beginning to move beyond broadcast: Founder and CEO Chet Kanojia is talking to pay TV channels and Hollywood studios about contributing to Aereo’s programming.
That worries virtually every major broadcaster: Networks and stations don’t receive a dime from Aereo and have sued, alleging that it violates their copyrights. If Aereo wins, then pay TV providers may be emboldened to reject broadcasters’ demands for rising retransmission consent fees — one of the fastest growing sources of revenues for station owners including ABC, CBS, Fox, and NBC. Aereo says that it’s perfectly legal to lease over-the-air antennas and add DVR-like capabilities to record shows, fast-forward and rewind.
I caught up with Kanojia last week at the International CES show in Las Vegas. Here’s our conversation, edited for length and clarity:
DEADLINE: You’re adding 22 cities this year. Is that it for now?
CHET KANOJIA: That’s Phase 1. That’ll hopefully keep us busy through the summer.
DEADLINE: And then?
KANOJIA: Then we’ll do more. We hope to do all the major markets as soon as we can. I think of 2013 and 2014 as build years for us. A lot of infrastructure build-out, get the customer adoption going, get the message right. That gives us a base to move to the next level. The next level may include digital programming, new channels, and who knows what.
DEADLINE: New channels, such as what? (more…)