Aereo TV Presses Onward Despite Complaints

March 13, 2012 Updated: October 1, 2015

News Analysis

Billionaire Internet and media mogul, Barry Diller
Billionaire Internet and media mogul, Barry Diller, attends an event in New York City, September 2011. Diller's Aereo Inc., a Web-based television streaming service, is set to launch in the New York market on March 14 amid controversy over distribution of copyrighted content. (Jamie McCarthy/Getty Images)

NEW YORK—Aereo Inc., a Web-based television streaming service, is set to launch in the New York market on March 14 amid controversy over distribution of copyrighted content.

The service costs $12 per month and lets subscribers access broadcast television—which anyone can receive with TV antennae (rabbit ears)—on the Internet and on mobile devices.

In addition to over-the-air television, Aereo will also stream Netflix and Hulu. Consumers have long clamored for a viable form of streaming television, and companies have been slow to provide such content. This is where Aereo comes in.

Similar types of service have been introduced in the past—Zediva is one example that comes to mind—but all were short-lived because television stations filed lawsuits for unauthorized distribution of copyrighted content. Zediva shut down last year, a few months after its introduction.

But Aereo may be different. For one, it is backed by Barry Diller, the billionaire Internet and media mogul and chairman of IAC/InterActiveCorp. Diller fully expected such lawsuits and is unfazed. In fact, he says that there are plans to expand the service to between 75 and 100 cities within a year of it debuting this week in New York.

Is he crazy? Apparently not—Diller is prepared for a drawn-out legal battle and likes his chances. “I completely understand their motivation [to sue],” Diller said in a keynote address at the South by Southwest Interactive Festival in Austin, Texas. “It’s going to be a great fight.”

Aereo is already subject to multiple complaints from television stalwarts ABC, NBC, CBS, FOX, PBS, as well as Spanish television broadcaster Univision. All of them are appealing to the courts to block Aereo’s launch this week.

Besides a shutdown, the broadcasters are demanding retransmission fees from Aereo. But Diller—and Aereo—argue that the company does not violate any established law. Aereo subscribers have their own antenna and have the right to view television programming over the air. Users have ultimate control over which channels to view.

“It is inevitable that the [television] business model must modernize along with the TV content. Consumers want choice and it is inevitable that someone will step up to provide just that,” said Aereo CEO Chet Kanojia in a company blog post. It is also inevitable that the established players in the television market will be ready to challenge. The only variable is whether the legal climate will allow such a technology to stay.

Diller, a media veteran, is no stranger to the television and online business. He was CEO of Paramount Pictures in the 1970s, and later was head of FOX Inc., which oversaw FOX’s television programs as well as its movie studio. As chief of IAC, he managed Internet properties such as Match.com, Ask.com, and CitySearch.

Whether Aereo will fly remains to be seen, but with Diller’s backing, it’s certain that challenging the company will be a tough fight for television stations.