Aereo CEO Remains Defiant vs. TV Foes, Sees Unbundling Ahead

5/20/14Follow @jpruth

For a man whose startup is fighting for survival before the U.S. Supreme Court, Chet Kanojia claims he does not lose any sleep over the matter.

Actually, the founder and CEO of Aereo said he gets little sleep at all as he pushes his company’s plans forward—rather than agonizing over legal battles. “We started this business to force change,” he said.

Kanojia took the stage at Internet Week New York in an interview with USA Today columnist Michael Wolff. New York-based Aereo offers a service that lets customers, for a fee, watch broadcast television streamed to mobile devices via mini antennas the company sets up at hubs in different cities.

But Aereo pays nothing to the broadcasters, who have cried foul and demanded rebroadcasting fees. Kanojia asserts that has company does not have to pay since it is not technically rebroadcasting; rather, Aereo claims, it allows consumers to connect their mobile devices to broadcast TV signals they already have the rights to view because they are renting individual mini-antennas.

That has led to the legal kerfuffle that made its way in April to the highest court in the land. The Supreme Court case will almost certainly determine whether Aereo’s service can continue—Kanojia himself has said a loss “may mean the end of our company,” and that “there is no Plan B.”

On Monday, Kanojia stuck firmly to his guns in his discussion with Wolff. “We started the company with the idea of putting TV in the cloud,” Kanojia said. He presented Aereo as a way to offer choice to viewers who want more ways to watch broadcast television when and where they want—without paying cable or satellite TV companies.

Depicting Aereo as part of a larger shift in the way television gets watched, Kanojia said viewers are looking for alternatives. “A lot of the cable shows people like end up in libraries [such as] Netflix, Google, Amazon Prime, things like that,” Kanojia said.

He spoke more sternly when questions rose about the legality of what Aereo offers and whether the company is merely exploiting loopholes in current law. “A lot of this is name-calling because of greed, anti-consumer behavior, monopolistic tendencies, and just posting profits,” Kanojia said, “as opposed to doing what you’re supposed to.”

Kanojia argued that broadcasters, after getting free access to valuable spectrum, are supposed to honor agreements with federal authorities, in exchange for providing freely available shows to the public. “What they’ve done systematically over the last two decades is to keep that proposition behind a cable pay wall,” he said. If consumers were to ask cable providers for à la carte-style viewing options, Kanojia said cable companies would still insist on selling large bundles of channels. “They’re getting paid for every channel for a 100 million homes, whether or not you’re watching them.” he said.

Aereo has been clashing with broadcasters from almost the moment Internet mogul and company backer Barry Diller introduced the startup two years ago at the IAC headquarters. Wolff pointed out that Aereo makes money from shows it has not paid to develop.

Kanojia argued that he does not see much difference between his company and equipment makers who generate revenue by selling televisions to consumers. “Sony made billions of dollars selling TV, showing other people’s programming they had no [stake] in,” he says. “So did RCA. So did TiVo. So did every VCR manufacturer that allowed consumers to record programming.”

Wolff pointed out that Kanojia’s argument could be viewed as sophistic and hyperbolic, but that did little change his tenor. But he was clear on who is opposition is. “I think anybody who’s an incumbent,” Kanojia said, “who is in the business of making money off of an artificial system, which is what they’ve created, is afraid of the profits going away.”

Kanojia said if Aereo wins its legal fight little will change immediately. He believes over the next 20- or 30-year the bulk of television will be online with consumers getting à la carte service to see what they want. “It will be a more rationally packaged product,” he said.

Conversely, Kanojia said he is unsure what may happen if Aereo lost its case before the U.S. Supreme Court. “I don’t know what that scenario looks like,” he said. “I don’t know what the specific ruling would be. It would be difficult to speculate on that.”

João-Pierre S. Ruth is the editor of Xconomy New York. He can be reached at jpruth@xconomy.com and followed on Twitter @jpruth. Follow @jpruth

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  • phlepper

    As someone who can’t get over the air (OTA) television due to issues with digital line of sight, I believe there is an untapped market of people who would love to have a service that provides essentially a “remote antenna” to give them access to the broadcast networks (ABC, CBS, NBC, Fox, and PBS) without having to pay outrageous monthly cable fees for something that is available to the vast majority of the US for free.

    And personally, I don’t think Aereo is doing anything wrong. Were networks going after apartment building owners previously when they put antennas on the roof and provided OTA service to all of their tenants? Isn’t this really the same thing?

    The biggest deterrent I hear for people who want to “cut the cord” with their cable providers is that they can’t get broadcast TV for live events and sports. As a Hulu subscriber, the majority of the shows I watch are on the broadcast networks. Services like Aereo would give 80% of the content most people want to pay for anyway and that scares the broadcasters.

    I’m really hoping the Supreme Court rules sensibly and doesn’t bow under the lobbies of the broadcasters and media moguls. This is a case of making currently freely available broadcasts (via OTA) freely available (via Internet) and I hope they don’t get in the way.