Broadcasters smash Aereo - old media vs new media 1-0

It would appear that it is game over for ambitious internet TV service Aereo, following the U.S. Supreme Court’s ruling against its viability last week. The David and Goliath battle between the digital streaming TV startup and the leading U.S broadcasters established, in the Supreme Court’s view, that the Aereo model violated copyright of broadcasters.

The court decision essentially ruled that Aereo is a cable TV company and as such is required to pay copyright owners content fees to transmit their programming to Aereo subscribers. Aereo defined itself as an antenna rental company and said that it will continue to fight, but the definitive ruling does not allow much operational leeway.

Aereo’s founder and CEO Chet Kanojia described the outcome as “a massive setback for the American consumer” which sent a “chilling message to the technology industry.”

Barry Diller, who invested US$20.5 million via his media company IAC has declared that it is “ over now,” for Aereo as there was “no Plan B” if the Supreme Court ruled against it.

Aereo had raised around $100 million, since launching in 2012 in New York. It is still in its infancy, available in just 13 cities with 100,000 subscribers.

Kanojia said after the ruling  that consumer access to free-to-air broadcast television is an essential part of the country’s fabric. “Using an antenna to access free-to-air broadcast television is still meaningful for more than 60 million Americans across the United States. And when new technology enables consumers to use a smarter, easier to use antenna, consumers and the marketplace win. Free-to-air broadcast television should not be available only to those who can afford to pay for the cable or satellite bundle.”

Consumer Electronics Association, CEO, Gary Shapiro said that the ruling  was a disappointment for “startups, consumers and proponents of technological progress as more and more of us are demanding the ability to view TV programming on our own tablets and smartphones, not just our TVs.”

For old world media, the broadcasters and major networks, the ruling upholds the regime and keeps the lucrative model of content and retransmission fees flowing.

An attempt at similar a service has been made in Australia by Optus with its TV Now service and, unfortunately, it also failed. In September 2012, following battles in the Federal Court, the High Court of Australia refused leave to appeal the decision, which prevented Optus from operating its TV Now service.

In terms of challenging the status quo, the loss for Aereo puts a spanner in the works for how cloud based broadcasting can operate, innovate and disrupt.

The ruling will not however halt the massive shift that the broadcast industry is experiencing and will have to deal with.  The digital migration away from bundled content offerings into the alternative models offered by the likes of  YouTube, HBO, Netflix and Amazon will move at pace. Aereo pushed the envelope in terms of distributing content with new modes of technology and will certainly not be the last.