Aereo’s Victory Could Eventually Upend Retransmission Consent, Analysts Warn

Wall Street is still buzzing about U.S. District Court Judge Alison Nathan’s decision yesterday that TV streaming service Aereo can continue to do business while broadcasters — including ABC, CBS, Fox, and NBCUniversal — pursue their copyright infringement suits against it. Had the decision gone the other way “it could have marked the end of Aereo,” Barclays Equity Research’s Anthony DiClemente says this morning. Wells Fargo Securities’ Marci Ryvicker adds that ”The most alarming sentence [in the decision] was: the ‘Plaintiff’s have not shown a likelihood of success [in their copyright case] on the merits’.” She warns that the news could ding stock prices today for major market TV station owners. Aereo, which is backed by IAC’s Barry Diller, takes local over-the-air signals and streams them to subscribers who pay $12 a month. It doesn’t pay anything to the stations themselves. Ryvicker urges investors not to over-react. She has tried Aereo and says it “is NOT a compelling product” due to “limited product support and a cumbersome ‘remote’.” As a result, she says, it is “not a real threat to the TV ecosystem.” But it could be if cable and satellite companies tap it, or the technology, so they can continue to offer local TV signals even when stations threaten to yank their programming in a retransmission consent dispute. Vijay Jayant of ISI: International Strategy and Investment Group shares the view that although the case “is far from over,” if Aereo does win then it “is likely to change the existing retransmission payment structure.”

If broadcasters can’t beat pay TV, then Lazard Capital Markets’ Barton Crockett says maybe it’s time to join them by ditching their transmitters and becoming cable channels. Sure, they’d lose about 10% of the population that depends on free, over-the-air TV. “But these are mainly lower income homes worth little to advertisers,” Crockett says. “And the offset is that broadcasters could potentially sell their licenses for other purposes, like mobile broadband, and reap a windfall.”

Comments (7)

  • And how would upending retransmission consent be a bad thing for the public?

    The current system is far too complicated. It’s time for something to come along that changes it.

    Comment by frenchjr25 — Thursday July 12, 2012 @ 11:37am EDT  
  • Like the article said, it could lead to the death of free OTA TV. If the major networks become cable channels, that would certainly be a change, but it would also be a bad thing for a portion of the public.

    Comment by Anonymous — Thursday July 12, 2012 @ 11:56am EDT  
  • How long can the broadcasters rely on worn copyright laws to protect their unique ecosystem? If it’s not Aereo then it will be something else. Broadcasters are spending a ton of money and time to defend a system that will eventually collapse. Either bc people don’t want their programming anymore, the r&d costs escalate beyond what’s profitable (this is already happening) and/or the ad dollars get wise and don’t want to pay the spot fees for broadcast (this is also already happening) So Advertisers will gladly surrender the “about 10% of the population that depends on free, over-the-air TV….mainly lower income homes worth little to advertisers,”. There you have it. The 10% of households that still use “antenna TV” is all that’s standing in between the old ecosystem and the new ecosystem that’s developing to take it’s place. The broadcasters know this and should spend their resources participating in the development of the new ecosystem and less defending the old. It’s the old flatbed vs avid battle. Guess who won that one?

    Comment by aa — Thursday July 12, 2012 @ 12:35pm EDT  
  • I agree, let’s get that valuable public spectrum back to companies who will actually use it to provide a public service. Its a disgrace that broadcasters are upset that their signal might actually be receivable by the people who were always supposed to be able to receive it in the first place.

    And no, they should not be allowed to sell it. It was licensed to them for a specific purpose. If they are going to decline to use it, they can return it.

    Comment by Bruce — Thursday July 12, 2012 @ 12:48pm EDT  
    • Damn straight.

      Comment by Lucky — Thursday July 12, 2012 @ 6:36pm EDT  
  • There’s no law that says you are guaranteed access to their signal, only that if you can recieve it over the public airwaves, you are free to watch/listen to it. But you aren’t free to rebroadcast it without their consent.

    Nothing is preventing people from putting up antennas and trying to receive the signal. No one is “suppose” to receive it, again there’s no guarantees that you will have access to it.

    So the big question is, is Aereo rebroadcasting or extending(placeshifting) the signal? That’s for the courts to decide. IMO they aren’t doing anything wrong, but I can see why the networks are worried if cable and sat companies start doing it.

    Comment by Anonymous — Thursday July 12, 2012 @ 3:06pm EDT  
  • Seems like the networks make a whole lot more in retrans and reverse comp than they would in carriage fees from cable co’s, no? And would all the local stations disappear, along with those ad dollars? or would the ad dollars go to the cable guys? Seems like a huge win for cable if broadcast networks become like superstations.

    Comment by ArnieB — Friday July 13, 2012 @ 8:07pm EDT  
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