While Aereo — the online service that transmits over-the-air network feeds to subscribers’ computers and mobile devices — is slugging it out with broadcasters in court, the operators of several cable and satellite services are reportedly looking to launch similar products of their own, setting the stage for an all-new TV war.
According to Bloomberg, DirecTV, Time Warner Cable, and Charter Communications are each looking into offering a service that would pull freely available network feeds from the airwaves then transmit them to customers over the Internet.
It could be a way for these cable companies to save billions in retransmission fees that they currently pay to networks to carry stations just about anyone can get with for the price of a decent antenna.
“If found to be legal, the Aereo concept is very interesting, especially as it relates to retransmission consent fees,” a rep for TWC, which is rumored to be interested in acquiring Aereo, tells Bloomberg.
Aereo, currently only available in a handful of markets, charges subscribers around $8/month for online access to their local broadcast feeds and a few other channels. While the networks accuse Aereo of stealing their signals by not paying retransmission fees, the startup contends that it is within its legal rights.
Aereo uses arrays of very small antennae, each dedicated to a single end-user. Thus, the company argues that it is offering nothing more than a fancy rooftop antenna, that just happens to be several miles away from the subscriber.
The networks have launched legal challenges in each of the regions that Aereo has launched its service, and while none have gone to trial yet, the broadcasters have repeatedly failed to find a court that would issue a temporary injunction against Aereo.
Since the case will eventually end up before the Supreme Court, the networks recently petitioned the robed ones in D.C. to let them skip the line.
If Aereo ultimately wins out in court, the networks could be saying goodbye to more than $3 billion in retransmission fees as cable and satellite operators figure out ways to copy the Aereo system and deliver network feeds without having to pay for them.
“This threatens the retrans gravy train,” one analyst tells Bloomberg.
Which is why executives from FOX, CBS, and Univision have all previously stated they would pull their network feeds from the air if Aereo wins in court.
It remains to be seen how Comcast would respond to an Aereo victory. As a cable company, it would only make sense that it use an Aereo-like technology to save itself a pile of cash by not paying retransmission fees to CBS, FOX, and ABC. But as a broadcaster and owner of NBC Universal, it stands to lose a pile of cash as other cable companies get around paying retrans fees to NBC and Telemundo.
The potential loss of retransmission fees could result in even nastier carriage fee negotiations between the broadcast networks — each of which owns several popular cable networks — and cable/satellite carriers. Sure, DirecTV might be able to make an end-run around paying for ABC, but will that just result in higher costs to carry other Disney-owned channels like ESPN and the Disney Channel?