The idea is that they're not watching the content on a conventional TV served by a decoder box; instead they are watching it on a handheld device or a computer using Internet-based streaming.
If said device happens to display the image on a large monitor, it still isn't coming through the established channels that their business models represent.
Well, yes and no.
Broadcasters don't really care where you watch, just that you do. That supports the ad model.
But that is not what the furor is about; broadcast also has a retrans compensation model. DBS and cable pay broadcasters to retransmit their services, at about $6 billion for just last year, which if you do the math, means that FOX got paid, by cable and DBS and FiOS, about $108 million just for the stations they own (not counting the $800 million that their partner affiliates got). Last year.
Aereo does not pay retrans, and the courts have said they don't have to. If Aereo can get away with that, what is to say DBS and cable should pay, and what is to say that new versions of Aereo competitors should pay? It is a slippery-slope argument, and broadcasters can't afford to lose and will not simply roll over.
It seems like Aereo is not really that different than someone putting antennae on peoples houses for free and then charging them to use them, which actually means more people would have more access to FOX, and would watch more. That helps the ad model, but decimates the retrans model.
So yes, it is saber rattling by Carey, but it is supported by every other broadcaster and is the right thing to do; it gets the attention of the courts and congress, and a president that is about to name two new FCC commishs. I am somewhat confident that the retrans argument will win out, and that the issue will hinge on the fact that even though Aereo is using a separate antenna for each customer to receive free TV just like any other citizen has the right to, that the fact that they are charging rent on the antenna and retransmitting the signal violates the spirit of copyright. But you never know; Aereo could prevail. And of course now the whole FX/FXX strategy seems to make sense in a whole new light.
Of course there is about a 5% chance that FOX would ever move to cable and TV stations would go dark, but there is a real chance, assuming broadcasters don't get their way, that FOX and others would move their prime-time and sports and maybe even 2nd-rated programming to cable, and that it would be blacked out and replaced by third-rated fare OTA for those stations, who would still provide exactly what they are providing now to cable and DBS, which is about where 90% of viewers are watching them anyway. Network O&O stations might even not allow local news or part of local news to remain OTA.
I have long predicted that broadcast TV would eventually split programming and send something different to their OTA transmitters than they send to cable and DBS, and that just might now come true. Subchannels was the first step in that direction, and Comcast and others have been sending different versions of their commercials to OTA and cable viewers for over 3 years. So in a way, its already a reality.
FOX moving to a pay-tv model could really happen; it's not simply a poison-pill empty threat. And they don't have to jump off a cliff; first you move baseball and playoffs/World Series to cable only, followed at some point by Sunday prime, followed by other parts of prime, followed eventually by anything that gets decent ratings. Hide and watch.
That gives them the chance to rip the bandage off slowly, and let the furor die down, and prod remaining stragglers gently to move from OTA over a long transition period, which becomes much easier if all the other Big 5 are threatening to do the same thing. Once the first domino in that series falls, and if Aereo has not blinked and agreed to retrans fees, I would dump all of your Aereo stock post haste. Content is king, and the guy with the gold makes the rules, which is the content providers and is not the content carriers. That is why there is increasing vertical integration in media companies as well.
<edit> Hmmm. Did I just post in the wrong thread? Maybe I should have said this here instead: http://www.dbstalk.c...ad.php?t=214187
Edited by TomCat, 12 April 2013 - 07:17 PM.