If No One Pays, Then What?


The latest brouhaha in the Broadcasters v. Aereo SCOTUS court case has Aereo claiming that if it loses its Supreme Court fight, then “cloud computing as we know it could be at risk”. I say, BALONEY. This fight has nothing to do with cloud-based computing, over the top television, or broadcasting. It has all to do with retransmission fees. Why else would the ACA come out in support of Aereo?
Unlike cable TV networks, local broadcast TV stations (ABC, CBS, NBC and Fox) distribute their signals over the air, using free spectrum granted to them by the federal government. In effect, taxpayers are subsidizing the distribution of broadcast TV signals. These same broadcast TV stations are then allowed by the government to charge cable and satellite companies for their signals — and if they don’t agree to pay, broadcasters can force the cable and satellite providers (i.e. resellers) to drop the channels, thereby adversely impacting their customers. These same broadcast stations have the option of requiring cable and satellite companies to carry their stations for no monthly fee, or negotiating a charge for the right to carry their station. You and I both know which of these options the broadcast stations have chosen.
So, for fun, assume Aereo wins (not likely IMHO), but let’s explore this possibility anyways. Aereo does not pay local broadcasters for their signal. But they collect money from subscribers for broadcasting these channels.  Sounds like a good deal if you’re Aereo.  But here’s the catch. If Aereo wins, then Comcast with its 21+ million customers won’t have to pay ABC, CBS, NBC or Fox any money to rebroadcast these same channels. Nor will DISH or DirecTV. All of the sudden, these broadcasters go from having 110 million subscribers paying them every month to nobody paying them every month.  
I’ve heard the argument from the pro-Aereo crowd – they say the broadcasters can sell ads to pay for programming. And yes, they can. But the sudden loss of hundreds of millions of dollars in recurring revenues will surely impact the quality of programming on these channels, should they choose to continue broadcasting for free.  
If Aereo wins, at an absolute minimum, it is almost a certainty any and all major league sporting events will move behind the pay wall. NBC has NBC Sports Network, Fox has Fox Sports 1, ABC has ESPN. Only CBS does not have a 24/7 Sports Network. That, I fathom, would change pretty quickly if all of the sudden CBS had to recoup their investment for NFL, PGA, and NCAA broadcast rights due to the loss of 110 million paying customers.
I’ve also read plenty about the landmark Cartoon Network v. Cablevision case and how that “cloud-based DVR” is not violating copyright. However, there is one major issue never mentioned when using this argument for Aereo. The major difference is Cablevision negotiated carriage agreements with every single channel they rebroadcast, so there is compensation paid to the broadcaster (i.e. the customer has paid for the right to watch that program at a later time using a DVR that just so happens to be in the cloud).  Something free-to-air customers have not done. Therefore, if you don’t pay for the right to watch, you don’t have the right to watch later outside of your home via an Internet rebroadcast you never negotiated for with the broadcaster.
WhereverTVis taking a very different approach as we continue assembling the channels for our US subscription service, due to launch later in 2014. We plan to pay for the rights to rebroadcast content and we also plan on letting each broadcaster dictate whether or not we can broadcast to mobile devices. After all, they are the owners of the content. And if no one pays, then what?
Posted by wherever at 4:59 pm 4 comments:

4 thoughts on “If No One Pays, Then What?

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