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Online Streaming Television Service Aereo Tests Traditional Broadcast Networks

April 12, 2013 at 12:00 AM EDT
Internet television service Aereo uses free signals from local stations and streams content online for a small fee. But several traditional broadcast companies, including PBS, Fox and CBS, have sued Aereo over copyright violations. Hari Sreenivasan discusses the details with The Washington Post's Cecilia Kang.

TRANSCRIPT

JUDY WOODRUFF: Now we look at new efforts to bring television online in a way that could alter the broadcast landscape.

It’s about a company called Aereo, which picks up free signals from local TV stations and streams them for a small fee. Some broadcasters, including FOX, Univision, NBC-Universal, CBS, and PBS sued, accusing Aereo of copyright violations. A federal court of appeals recently ruled that Aereo could provide network shows.

This week, FOX and Univision fired a warning shot in response, suggesting that they may one day provide television programming only through cable.

Hari Sreenivasan sat down with Cecilia Kang of The Washington Post on the potential impact.

HARI SREENIVASAN: We’re joined by Cecilia Kang of The Washington Post.

Thanks for being with us.

CECILIA KANG, The Washington Post: Thank you.

HARI SREENIVASAN: So, let’s kind of flesh out what Aereo is trying to do.

CECILIA KANG: So, what Aereo in the simplest form does is it takes broadcast TV, network TV, and it brings it to the Internet. And it brings it to your Internet-enabled devices, so your smartphone, your tablet, your computer, or your Internet TV.

And it does that by capturing public broadcast shows like PBS, NBC shows, ABC, CBS, Univision, from the public airwaves, and it captures those signals through thousands of tiny, tiny antennas. And then a consumer can choose to pick and choose from a menu of options any show they want to watch on network TV on any of these devices. So it brings TV to the Internet, basically.

HARI SREENIVASAN: So all these broadcasters, including PBS, went to court and said that this is copyright infringement. And the judges disagreed.

CECILIA KANG: The judges did disagree.

And it was a really important case that everyone in the TV industry is watching, in that what the broadcasters are saying is that Aereo seems to be kind of look and feel just like a cable television provider. If you look at its menu, it actually looks a lot like your Verizon FiOS, your Comcast menu of options that they provide.

But what the judges decided and what Aereo has argued is that they are not. What they essentially do is they just provide thousands of tiny antennas that allow individuals to pull content that’s already on the public airwaves. And they essentially act no different than a DVR. And a DVR service is actually deemed legal.

So the judges agreed with Aereo in a very technically complicated case that has big implications for the broadcast industry.

HARI SREENIVASAN: So how much money are we talking about? Obviously, the broadcasters are kind of concerned about this because it could compromise some of the money they make from cable companies that pay them for the same signal.

CECILIA KANG: That’s right.

There’s so — there’s millions and millions of dollars in contracts that the broadcast networks have — receive in licensing fees from cable companies. They want Aereo to pay in the same way. So this is millions and millions. And this is an individual contract that they are losing out on in their mind.

At the same time, they say that they believe that they’re losing out on advertising revenue, too, because they think that people skip through the advertisements when they see their network programs on the Aereo service.

Aereo does actually air all the advertisements just as the networks would provide.

So they’re talking about lost revenue in advertising, as well as licensing fees, which are known as retransmission fees.

HARI SREENIVASAN: So one of the executives at FOX News said — or I should say FOX overall said, maybe if this succeeds, we’re going to go ahead and take ourselves off the public airwaves and put ourselves just on cable.

And would other content providers follow suit?

CECILIA KANG: It was a pretty audacious statement.

This was this week, where the president of FOX did say that. And other networks have also voiced support. CBS has also said that they sympathize with FOX’s position. Univision said that they would do potentially the same thing. So there’s a lot of — and NBC — there is speculation that NBC might be interested in the same thing.

There’s speculation also, but there is sort of a — some people think that this might be a business negotiation tactic, sort of just a threat that may not be really in earnest. But at the same time, it’s a hugely audacious and very interesting idea to go completely behind a pay wall, if you will, to go from free over the air to cable only.

HARI SREENIVASAN: Right.

CECILIA KANG: And there’s 54 million Americans who rely only on still broadcast over the airs — over the air. And that 54 million who would lose out on television programming.

HARI SREENIVASAN: So that’s obviously the market that Aereo wants to go after. They see that that is possibly money.

How disruptive is this technology, and what is maybe a parallel analogy? Is what Aereo doing to TV similar to what voice-over I.P. was to telecom companies? Or how do we keep this in perspective?

CECILIA KANG: Sure.

Well, I think big picture, the Internet is disrupting every single industry, my industry, the newspaper industry, the broadcasting industry, entertainment, music, et cetera. But it is very disruptive in the sense that it provides consumers something that they want increasingly, which is on-the-go, on-demand entertainment and information, and much more control over what they can see and get and hear.

And so they want to, wherever they are, on their smartphone, be able to watch the shows they want to see, live TV, live sports, live news, record it. They want control. And consumer demand is really what’s driving these businesses, these new businesses to emerge, like Aereo.

So it is very disruptive for the traditional broadcast industry, but not only that. It’s very disruptive for consumers because it provides consumers — disruptive in sort of a positive sense, if you will, in that it gives consumers the kind of options that they are increasingly yearning for. They want to be able to pick and choose what content they get on TV, as opposed to being forced cable bundles of hundreds of channels, for example, which are increasingly more expensive each year.

HARI SREENIVASAN: So, what’s next for Aereo, lawsuits or expansion?

CECILIA KANG: Both.

Aereo plans to continue to expand to 22 cities, including Washington, D.C. And it will continue to do so as long as the courts don’t stop them. But the network broadcasters are continuing their fight in the courts. So they will take this, their case, into the courts continually. And they will probably also take this to the Hill to really try to get lawmakers to relook at redefining where Aereo fits in the space of communications law, and whether there needs to be new definitions for Internet online service providers.

HARI SREENIVASAN: All right, Cecilia Kang from The Washington Post, thanks so much.

CECILIA KANG: Thank you.