Aereo, the service that captures free over-the-air TV broadcasts and streams them online for $12 a month, has come under fire from just about every major TV content provider, from local and national networks to the National Association of Broadcasters. This Wednesday, several of them filed statements seeking a preliminary injunction that would stop Aereo from operating while it deals with the suits against it. So what arguments are NBCUniversal, CBS, Fox, a local ABC affiliate, and others making against Aereo?
"Any economically rational cable operator will use it as leverage in upcoming retransmission negotiations."The biggest complaint about Aereo's service is, unsurprisingly, that it will lead to a kind of tragedy of the commons. If Aereo doesn't pay for service, critics say, why would anyone else want to? "It makes little economic sense for cable systems and satellite broadcasters to continue to pay for NBCU content on a per-subscriber basis," says Matt Bond of NBCUniversal, "when, with a relatively modest investment, they can simply modify their operations to mirror Aereo's 'individual antenna' scheme and retransmit, for free, over-the-air local broadcast programming." In other words, they could use the same setup as Aereo, capturing broadcasts over a "tiny antenna" for each customer, and get around paying to include local channels in their packages.
While a single company serving one US market probably won't have as great an impact as these complaints suggest, Bond and others say that cable providers may already be looking for ways to lower costs in the wake of Aereo. "Any economically rational cable operator (or satellite company)," remarks Bond, "will use [Aereo] as leverage in upcoming retransmission negotiations," and Fox's Sherry Brennan says "it is my understanding that cable companies have already referenced Aereo when discussing lowering their retransmission fees."
Nielsen ratings and demographics, which play a role in advertising sales, are also a potential problem, networks say. Since Nielsen "does not report the number or the demographics of web-based viewing," Fox and others have complained that they won't be able to woo advertisers with solid data. Martin Franks of CBS says that it's not "impossible to develop alternate ways to measure viewership," but that these methods are not accepted by advertisers. Still, several networks have circumvented the problem for their own Dyle mobile TV service, and it's not clear that companies have seriously examined any of these alternate methods.
"It will completely undermine the ability of content owners to decide the ways they wish to distribute copyrighted television programming."
Beyond that, there is the question of copyright. Leaving aside the potential "viral infringement" that nearly every network mentions, Aereo is retransmitting content without licensing it, even if the content is available for free, and people like NBCUniversal Senior VP Salil Dalvi argue that it would "completely undermine the ability of content owners to decide the ways they wish to distribute copyrighted television programming over mobile platforms." Some of the scenarios that are paint, however, don't seem all that likely. Brennan argues that "there is nothing preventing Aereo from preempting Fox programming, from replacing Fox ads... adding banner ads around the programming, or from inserting content into (or removing content from) the stream" when it retransmits the broadcasts and later worries that it could even resell the broadcasts to cable companies.
Even if Aereo were attempting to license the broadcasts, networks don't seem likely to go along. The statements repeatedly invoke the fear of Aereo leading viewers to "cut the cord," or of online viewing making piracy inherently easier. Networks' own online streaming services like Fox.com or Hulu (Dyle is actually transmitted through a separate radio signal, not the internet) only offer content after an enforced waiting period. Though live TV apps exist for current cable subscribers, CBS, for example, says that offering such streaming on its own would "cannibalize... the core of its business: free, over-the-air delivery of its broadcasts." Viewers are clearly interested in apps and online streaming, but for content providers, this consumer response may not be enough to outweigh what they see as a proposition with high risks and low rewards.