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Explainer: What's Aereo, why does it matter, and will it kill cable?

Explainer: What's Aereo, why does it matter, and will it kill cable?


With an important court decision in its favor, here's how Aereo could change the future of live TV

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Aereo (STOCK)
Aereo (STOCK)

Aereo is trying to make live TV available over the Internet and yesterday the company got a step closer. The United States Second Circuit Court of Appeals declined a request by some of the country's largest television networks to issue a preliminary injunction against Aereo, which would have closed the service down. The broadcasters allege that Aereo violates their copyrights by distributing their shows without compensating them. Aereo says all it is doing is helping people watch freely available over-the-air broadcasts online, which they have a right to do. At stake is nothing less than control of the airwaves. To this point, it's been a complicated story and there's still more debate to come. Now is a good time to try to figure out what this might mean for you.

If Aereo prevails in court, it could make cutting the cord easier

What is an Aereo?

Aereo streams live TV shows over the Internet to subscribers. The company obtains the shows by capturing over-the-air TV broadcasts. Aereo houses millions of dime-sized TV antennas at its facilities and assigns one of these high-tech rabbit ears to each customer. From their PCs, customers control which stations the antennas pick up and can also access DVRs. Aereo managers say all they do is enable users to view freely available OTA broadcasts with the use of their PCs.

Who are the people behind Aereo?

Chet Kanojia is CEO and founder. Before Aereo he founded Navic Networks, a company that specialized in interactive advertising that Kanojia sold to Microsoft in 2008. His main investor in Aereo is Barry Diller, the billionaire tycoon. As a 32-year-old, he ran one of the major Hollywood studios, where Michael Eisner and Jeffrey Katzenberg called him boss. He helped build Fox TV. Maybe his smartest move in media was getting out. He turned his attention to interactive companies in the 2000s when he created IAC / InterActiveCorp, parent company of,, and Vimeo.

Aereo says it doesn't distribute anything — customers control Aereo's antennas

How does Aereo make money?

The company offers several subscription plans and charges $12 per month for its premium package, which includes live local TV, 40 hours of DVR storage, pause, and rewind functions and two antennas that enable them to record two shows at once.

How can I get Aereo?

Aereo's service is available in New York and parts of New Jersey, Connecticut, and Pennsylvania. By the end of the year, the company plans to be in 23 US cities.

Why should I care about Aereo's case?

On the Internet now, plenty of places offer movies and TV shows, but live news and sports events have never been easy to find. If Aereo prevails in court, cutting the cord could become much easier.

Broadcasters have vowed to fight on

Why all the conflict?

ABC, Fox, NBC, CBS, and PBS, are among the broadcasters that tried to convince an appeals court to shut Aereo down. They failed. A year ago, the broadcasters filed copyright suits against Aereo, claiming the law requires companies to compensate creators for the copyrighted material they distribute for commercial gain. Aereo says it doesn't distribute anything — customers are the ones controlling their Aereo antennas. Yesterday, the United States Second Circuit Court of Appeals agreed and found that Aereo's service enables a private performance.

How will the broadcasters respond?

They have vowed to fight on. The decision by the appeals court only meant that Aereo can keep operating while the case goes forward. It is likely that the lawsuit will continue to wind through the courts for some time. If the broadcasters eventually lose, they say it could mean the end of free, over-the-air broadcasts, and that means pay-for-play Super Bowls. They also argue that it could also threaten the retransmission fees the broadcasters receive from cable companies. If the cable companies see that they can get around paying those fees for local programming, why wouldn't they follow in Aereo's footsteps and offer their own tiny-antenna service?