New York
Forbes:
Holy Cow: Two of the Big Four TV Networks Are Considering Going Off the Air
How worried are the owners of the major broadcast television networks about Aereo, the Barry Diller-backed digital television service they’ve been trying unsuccessfully to sue out of existence? Worried enough that at least two of them are actively entertaining the possibility of pulling their free over-the-air signals altogether.
That may sound like a doomsday scenario, but it’s happening, says Garth Ancier, a former top-level executive at NBC, Fox and WB. A Reuters story about the threats posed by Aereo and Dish Network’s ad-skipping Hopper DVR to the broadcast business model quoted Ancier making the claim that two of the Big Four networks — ABC, CBS, NBC and Fox — have for months been evaluating whether they might be better off becoming, in effect, cable channels.
(snip)
That threat is existential. Together, Aereo and Dish represent a devastating potential one-two punch, with Aereo undermining the networks’ ability to charge distributions retransmission fees (worth an estimated $3 billion by 2015) and Hopper handicapping their efforts to sell advertising.
While Dish Network reaches 14 million households, Ancier believes it’s the lesser of the two dangers, since media conglomerates possess significant leverage with Dish — ie., the threat to pull their programming.
When it comes to Aereo, which uses a novel interpretation of copyright law to capture and stream free over-the-air TV signals, the networks have no such negotiating power.
Having failed to secure an injunction to keep Aereo from operating, their hopes of challenging its legality are fading. Unless their luck turns, Ancier predicts they will indeed be forced to resort to the previously unthinkable and pull their signals off the air.
I looked up Aereo, and come to find out, it’s basically a Barry Diller-owned server farm with TV antennas that feeds over-the-air signals onto the internet, and subscribers to Aereo can use Aereo’s server farm disk space as a DVR. The hitch is that you have to be within the normal TV broadcasting range of a city that Aereo serves (only New York for now, expanding to more cities soon but not including St. Louis) to use Aereo to watch that city’s over-the-air channels.
Yawn.
And the networks’ response? They’re so pea green with jealousy for some reason that two of the four OTA nets are thinking about going off the air forever and becoming cable channels. That’ll show ‘em — Limit your already ratings-retarded network programming to even fewer eyeballs, in an era when more and more people are dropping cable and dish because they can’t afford it. In reality, the nets should be welcoming Aereo, because more potential eyeballs means that they can probably ratchet higher distribution retransmission fees from the affiliates precisely because Aereo will mean higher potential and real audiences for said terrestrial TV stations.
But if my reasoning is all wet, and the OTA nets have a good reason to think that Aereo is the Waterloo of their business model, then they have an Ace in the Hole that is the Achilles Heel of Aereo’s business model, one that they probably know nothing about, and more Machiavellian than threatening to go off the air. (I better stop there before I get too corny in my analogies). What’s that, you ask?
End user ISP bandwidth caps, both on the residential/hard-wired end (DSL or cable) and now increasingly with mobile carriers, and mobile bandwidth caps are even more restrictive than the fixed residential services. How will Aereo expect everyone’s internet-connected devices to become their TV sets if their pipes have monthly bandwidth caps? I expect Aereo’s dilemma here to present worse on the mobile side than the fixed side, because people’s fixed internet connections are in the same places as their own TV sets, so they can just watch OTA TV at home without running their fixed ISP’s bandwidth meter to watch Aereo. But people who are mobile have to use Aereo, which means either running the bandwidth meter on their fixed residential ISP service if they’re close to their home routers, or sucking their even more severely limited 3G/4G cell provider’s bandwidth meter if they’re on the streets.
Because I think ISP bandwidth caps are basically the ISPs’ sops to multimedia conglomerates to prevent music and movie piracy, I think the business relationship that exists here can be fired up and exploited again to squash Aereo. If your physical and/or mobile ISP starts narrowing its monthly bandwidth caps, (and I’ll be keeping an eye on my own, Charter and Verizon), then you’ll know someone else has figured out what I just did.
