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Broadcasters AereoTheir Grievances

The Senate Commerce Committee gave Aereo TV investor Barry Diller a platform last week to promote his antenna farm/online TV station subscription service, which launched last month to a chorus of broadcasters crying foul, with a few immediate lawsuits tossed in for good measure.

However, Diller found a much warmer welcome from Commerce Committee chairman Jay Rockefeller (D-W. Va.), who called him one of the committee’s “sublime” witnesses. Rockefeller added that he had known Diller for many years and even mentioned that his wife—noncom exec Sharon Rockefeller—said “Hi.”

On so prominent a platform, Diller talked about the hegemony of traditional distribution that the disruptive nature of the Internet was a threat to, suggesting that if he were a broadcaster, he would have done exactly what they are doing now by trying to protect their arena and tie “an anchor and tin cans” on anyone trying to muscle in on their turf.

But Diller’s voice did not go unchallenged.

Ironically, Senator Jim DeMint (R-S.C.), who has otherwise discom! ted broadcasters with his bill to scrap retransmission consent (something he pitched at last week’s hearing), probed Diller’s argument.

The argument goes that Aereo TV is a natural evolution of content delivery, similar to the rise of home recording, which content creators and distributors fought—and lost—in the Betamax case.

DeMint, ranking member on the Communications Subcommittee— who could be in line for ranking member or even chairman of the full committee, depending on how the election goes—saw it differently. DeMint asserted that Aereo TV appears to be intercepting signals and retransmitting them, charging viewers for distributing a network while not paying content providers. Diller pitched the service to the committee as a technological innovation that gives viewers access to “perfect” HD pictures using their own personal remote antenna to view online programming they do not have to pay for.

Diller insisted that DeMint was wrong on all counts. He said the service was not retransmitting or distributing content and was not a network. He likened Aereo TV to a Radio Shack antenna, and said that if Radio Shack was considered a distributor for selling an antenna to a consumer, then so was Aereo TV because it was analogous. As to the broadcasters’ fighting Aereo, Diller suggested it went with the territory.

Any technological development that threatens hegemony is going to be challenged, Diller added. In fact, he conceded that if he were a broadcaster, his reaction to Aereo would be the same, which he characterized as attempting to protect the core business at all costs. But he insisted he would also recognize that the quid pro quo for broadcasters’ free government license was delivering a signal that viewers had a right to receive through an antenna.

“Aereo simply allows consumers to get what was the quid pro quo for broadcasters to receive their free license,” he said.

There were no broadcasters, or cable operators for that matter, at last week’s hearing, and a committee source said there were currently no plans for a follow-up hearing featuring members of either group.

But, speaking on background, a broadcast executive from one of the many companies suing Aereo had plenty to say. “The notion of 100,000 dime-sized antennas in a warehouse in Brooklyn is baloney,” the exec said. “What they are trying to do is conceal and camou" age a retransmission service by way of streaming and pretend it is something else. If they were honest about it, they would license the content.”

Diller—in essence, using the popular “You say ‘to-MAY-to’” defense—further pitches that Aereo, with its combination of antennas, DVR functionality and online distribution, is analogous to the time-shifting of programming via VCRs, giving consumers the freedom to record a video program in advance and watch it later, expanding consumer choice by untethering them from schedules [and in Aereo’s case, devices] determined by broadcasters.

To that, the broadcast exec responded: “The answer is, Netflix, iTunes, Hulu are serious, honest advances in technology that license content and deliver it by virtue of new technology to the consumer. There is nothing new about streaming, and that is what Aereo proposes to do. The only difference is, instead of licensing the content, they propose to steal it. They are trying to skate through a loophole.”

While last week’s Senate hearing was more about talk than action on online video, broadcasters are concerned about the ramifications of the Aereo court case. Diller’s contention that he is not distributing or retransmitting content also evoked another key concern: the FCC’s request for comment on the definition of multichannel video programming distributor (MVPD). That could determine whether online video programming distributors (OVPDs) who do concede they are distributing content are subject to retrans obligations.

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