Executives with the major broadcast TV networks this week joined forces to go after streaming startup Aereo, arguing that it runs afoul of existing distribution deals and could result in rampant piracy.
"In sum, what Aereo is doing by simultaneously transmitting Fox telecast on the Internet is competing with Fox using Fox's own content," Sherry Berman, senior vice president of distribution strategy and development at Fox Cable Network Services, wrote in a Wednesday court filing.
Aereo, which is backed by IAC Chairman Barry Diller, allows for streaming of broadcast TV over the Internet. It manufactures tiny HDTV antennas and then stores the content they capture on remote servers for a $12 monthly fee. It serves a single market - New York City - and provides access to NBC, ABC, CBS, Fox, the CW, plus 20 or so other local channels. Users can record shows, and don't need to purchase or install any equipment.
In March, Twentieth Century Fox, Fox Television, Univision, PBS, two local New York TV stations, ABC, Disney, CBS, NBCUniversal, Universal Network Television, and Telemundo sued Aereo for copyright infringement. This week, as first reported by The Hollywood Reporter, executives from various stations offered up their take on the potential effects of Aereo.
In essence, the TV stations believe Aereo will cost them money. But they also voiced concern about unfair competition and piracy.
The stations make money by licensing their content to cable providers like Time Warner Cable, Verizon, and Direct TV. If Aereo is essentially gaining access to broadcast content for free, Aereo "reduces the value of those programs to NBCU's current distribution partners," argued Matt Bond, executive vice president of content distribution for NBCUniversal Media.
This creates "huge, perhaps insurmountable," disincentives that could affect the licensing negotiating process, he said.
Fox's Berman said that cable companies have already referenced Aereo, which means they could start demanding lower fees.
An Aereo spokeswoman declined comment on the filing, but during a recent appearance on Capitol Hill, Diller insisted that Aereo is "not re-selling anything; [it's] a technological platform," he told the Senate Commerce Committee.
"You have an antenna that has your name on it, figuratively ... and it's one-to-one. It is not a network," Diller said. "It is a platform for you to simply receive, over the Internet, broadcast signals that are free and to record them and use them on any device that you like."
The networks, however, pointed to Internet streaming deals that make their partners wait at least one day until they can make broadcast content available online. This puts Aereo at an advantage by providing access to live broadcasts, as well as recording functionality.
Aereo is "usurp[ing] ABC's right to control the distribution of its content," said Dave Davis, president and general manager of WABC-TV.
To that end, partners must also utilize strict copyright protections to prevent the unauthorized distribution of certain TV shows. Aereo, however, is not bound to these agreements.
"CBS's agreements with cable operators and others typically require those distributors to employ technological measures that are consistent with existing industry standards. Such standards include various types of technologies inside the set-top box to ensure that programs remain secure from hacking, such as the CableCard technology," said Martin Franks, executive vice president, planning, policy and government relations for CBS. "Because Aereo's dissemination of its programming is unauthorized, CBS has no ability to compel Aereo to implement technologies and take steps to protect that programming from further unauthorized distribution and reproduction."
"[This] exposes NBCU to virtually unlimited piracy," NBCU's Bond said.
Fox's Berman also suggested that Aereo could alter the content, adding its own ads on top of the stream or omitting certain content - again, profiting from something to which it does not own the rights.
For more, see PCMag's full review of Aereo and the slideshow above, as well as 5 Reasons Aereo Isn't a Cord Cutter's Dream.
For more from Chloe, follow her on Twitter @ChloeAlbanesius.
