Aereo Deal With Broadcasters Seen Unlikely
The future for Aereo after its U.S. Supreme Court defeat (CD June 26 p1) isn’t clear, but it’s not likely to end up being bought by broadcasters or content companies, several broadcast officials and industry analysts told us Thursday. Aereo CEO Chet Kanojia has said in media reports that the company’s technology is valuable. NAB President Gordon Smith told us in an interview Wednesday (see separate report below) that broadcasters could eventually seek to do business with Aereo. But Aereo’s likely not an attractive acquisition for broadcasters with its business model seemingly destroyed by Wednesday’s 6-3 decision, said BIA Kelsey Chief Economist Mark Fratrik: “Aereo doesn’t really have a lot to offer.” Aereo did not comment.
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Unlike Aereo’s current incarnation, a broadcaster-owned version would be able to legally stream content, though without some sort of further agreements it would be limited to content owned by its parent company, several broadcast officials said. Owned by a network and streaming only that network’s content would leave Aereo looking exactly the same as TV Everywhere or other mobile TV systems owned by content creators, said an executive. Since most networks already have some version of such a system, it’s unlikely they would buy Aereo to accomplish the same thing.
If one or more content companies bought Aereo and started using it to deliver their content, networks or content companies left on the outside would likely be hostile to the venture, because it would likely cut into revenue by encouraging cord cutting, said Guggenheim Partners analyst Paul Gallant. Broadcasters would be more likely to buy Aereo as a group and use it to deliver all their content, Gallant said, but most already have ways to access their content online.
It’s possible that Aereo could continue functioning by operating like an multichannel video programming distributor and cutting deals with broadcasters to pay retransmission fees, Smith told us in an interview to be shown this weekend on C-SPAN’s The Communicators. However, since Aereo’s business model was designed around not paying such fees, it may not be able to absorb the cost, broadcast attorneys have said.
If Aereo’s business model isn’t attractive to potential purchasers, its technology may be, said a broadcast attorney. Aereo’s system combines individualized small antennas with a remote DVR, all controlled by users online. Those features aren’t special and wouldn’t achieve very different results from the way broadcasters already put their content online, said a broadcast executive.
Broadcasters also might not want to buy Aereo out of concern that doing so would encourage copycats fishing for a buyout, said the executive. That’s the same reason record companies didn’t buy out early music sharing companies like Napster, the executive said. Other industry officials said it’s possible that particular features of Aereo’s system could prove attractive to potential purchasers, but weren’t aware of any specific interest.