Diller: Aereo could claim 35% of US households

Michelle Clancy | 22-11-2013

Aereo, the over-the-top (OTT) streaming video company that retransmits local TV feeds over the Internet, could go on to claim a full 35% of US households should it overcome its legal challenges.

Billionaire backer Barry Diller, speaking at a conference hosted by Bloomberg LP in Chicago, noted that
Aereo's $8 service appeals to a wide demographic, especially younger people, as cable subscriptions continue to escalate past the $100 mark.

"This closed circle of broadcast and cable and satellite is going to break up," Diller said. "It's not going to maintain itself in the next decade."

Aereo is a threat to broadcasters given that it doesn't pay retransmission fees to carry their content thus dipping into the $300 million that cable, satellite and IPTV would otherwise pay. The greater the household penetration for Aereo, the less leverage that NBC, CBS, ABC and FOX have to demand increased retrans fees from pay-TV operators.

Broadcasters and content companies have accordingly kept Aereo tied up in copyright litigation. But the Second Circuit court of Appeals recently concluded that Aereo did not violate copyright laws by not paying for the TV station signals that it collects, thanks to the antennae farms that it uses. Effectively, it argues that it's merely an over-the-air enabler. Now, broadcasters have asked the Supreme Court to take it up.

"If copyright holders lose their exclusive retransmission licensing rights and the substantial benefits derived from those rights when they place programming on broadcast stations, those stations will become less attractive mediums for distributing copyrighted content," the NFL and the MLB said in an amicus brief to the Supreme Court.

Diller however is bullish. "We are putting more money in," he said, adding that a nationwide rollout is the goal.