Aereo, which already has disrupted the television landscape in New York City, is coming soon to Houston and 21 other U.S. markets – but only if it survives legal attempts to kill it.
On Tuesday, Aereo CEO Chet Kanojia announced at CES in Las Vegas that the company would embark on a major expansion of its service, which currently is only available in the Big Apple. Aereo will fuel its efforts with a $38 million financing round.
Aereo lets you receive traditional broadcast television on non-traditional devices, streaming the signals to PCs, tablets, smartphones and even Roku boxes. It works by providing each subscriber with his or her own dime-sized antenna – clustered by the thousands in arrays – which then pulls in local signals for each market. The service includes an in-the-cloud DVR so you can pause, rewind and fast-forward shows.
Aereo starts at $8 or $12 a month for a subscription, or you pay $80 a year. There’s also a $1 day pass. You can also try out Aereo, but only if you’re in New York City.
Even though it collects cash from its customers, it doesn’t pay broadcast stations a penny, and that’s caused some consternation – and, as you’d expect, legal challenges.
Here’s more on those legal challenges.
A federal judge in New York ruled in July that the service doesn’t appear to violate copyright law because individual subscribers are assigned their own, tiny antenna at Aereo’s Brooklyn data center, making it analogous to the free signal a consumer would get with a regular antenna at home. Aereo spent the subsequent months selecting markets for expansion and renting space for new equipment in those cities.
“The court decision was the green light in our perspective,” CEO and founder Chet Kanojia said in a recent interview at Aereo’s sparse offices in a former engine factory in Queens. “This is an opportunity of a lifetime to build up something meaningful to change how people access TV.”
Aereo is one of several startups created to deliver traditional media over the Internet without licensing agreements. Past efforts have typically been rejected by courts as copyright violations. In Aereo’s case, the judge accepted the company’s legal reasoning, but with reluctance.
If the ruling stands, Aereo could cause a great deal of upheaval in the broadcast industry. It could give people a reason to drop cable or satellite subscriptions as monthly bills rise. It also might hinder broadcasters’ ability to sell ads because it’s not yet clear how traditional audience measures will incorporate Aereo’s viewership. In addition, it could reduce the licensing fees broadcasters collect from cable and satellite companies.
Broadcasters have appealed the July ruling. At a November hearing, appellate judges expressed skepticism about the legality of Aereo’s operations. In addition, the original judge’s ruling was preliminary, made as part of a decision to let Aereo continue operating while the lawsuits wind their way through court. Even if courts continue to side with Aereo on the legality of its setup, broadcasters still could nitpick on the details and try to argue that the antennas don’t actually operate individually as claimed.
I’d certainly call Aereo’s business model disruptive, so there’s quite a lot at stake here. For now, all you can get on Aereo is broadcast channels plus the Bloomberg Network, which reached a deal with Aereo. I’d think that if Aereo survives the challenges, or gets Congress to clarify the law in a way that accommodates what they do, it’s likely they’d make deals with other cable channels to carry them as well. It’s possible that this could lead to the kind of a la carte TV service that people have been predicting/demanding for years. Or it could get squashed and nothing will change for a decade or more. Who knows? Aereo’s press release is here, and you can pre-register for their service here. Hair Balls has more.