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Cable Technology Feature Article

July 10, 2014

Could Aereo Reemerge as a Cable TV Company?

By Gary Kim, Contributing Editor

In the wake of a Supreme Court ruling that determined Aereo is essentially a cable TV system retransmitting off-air TV signals, and therefore must pay TV broadcasters fees to retransmit to Aereo customers. Now, Aereo has asked permission to do just that.

Broadcasters claim to be shocked. They shouldn’t be. Cable TV began life as a business importing distant TV signals to rural areas that otherwise could not receive over the air TV signals.

So cable TV literally was a simple retransmission service. Only later, in the early 1970s, did cable TV begin to offer new programming (Home Box (News - Alert) Office) and the “satellite superstation” (TBS), essentially changing the industry from a “signal retransmission” business model to a new “more choice” business model.

It isn’t clear that a “local TV signals only” business model would work. Consumers already can buy such “antenna basic” services from cable TV operators, though few do so.

Such basic, or "antenna basic" services provide local off-air signals and typically also some home shopping, educational, government, and public-access channels, and might cost $15 to $20 a month.

In its initial incarnation, Aereo was selling access to local over the air stations for $8 a month. If Aereo were to win approval to operate as a cable TV operator, it would pay local broadcasters for access to their signals. But the retail price would have to be higher. Just how much higher is perhaps the issue.

Aereo content would still have the advantage of being viewable on a variety of devices with Internet access, not just through a fixed connection to TVs. Whether that is a realistic option for Aereo is not so clear.

Some think Aereo ultimately could be used by local broadcasters as an owned distribution platform to get their existing content “online” in a scalable way.

Nobody should be shocked that Aereo wants to at least explore whether it might be able to create a sustainable new business on a cable TV model. If for no other reason, gaining such rights would make Aereo a more-attractive acquisition for some local broadcaster-affiliated entity.

Edited by Maurice Nagle

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