It may not have the same impact as the court-ordered breakup of AT&T in 1984 — which spawned seven independent regional Bell operating companies — but a federal court ruling last week in a case pitting a 2-year-old Internet company, Aereo, against the four major broadcast networks — FOX, CBS, NBC and ABC — could mean the end of television as we know it.
Since NBC launched “the world’s first regularly operating network” in 1947, followed shortly by CBS and ABC, over-the-air television has been free to anyone who had a receiver, just like radio.
But Aereo, backed by Barry Diller, the former TV exec, threatens to change the game by offering its paid subscribers live streamed news, sports and entertainment broadcasts by NBC, CBS, ABC and FOX.
The networks sued Aereo 13 months ago, asserting that the New York-based company was selling their copyrighted content without compensating them.
Federal judge Alison Nathan denied the networks’ request for an injunction in July. The networks appealed to the 2nd U.S. Circuit Court of Appeals in New York. The appellate court last week upheld Judge Nathan’s ruling, declaring that Aereo’s streams did not amount to copyright infringement.
“When you are on the right side of the law,” Aereo CEO Chet Kanojia said, “you can stand up, fight the Goliath and win.”
Well, Aereo is no David and FOX, NBC, CBS and ABC no four-headed Goliath. And if, as it turns out, Aereo actually is on the right side of the law, well, as Charles Dickens famously wrote, “The law is an ass — an idiot.”
The networks spend billions of dollars to offer their viewers original content. They recoup their investment, in part, by collecting payments from affiliate stations and, in recent years, retransmission fees from pay-TV systems.
Aereo asserts that it has a legal right to retransmit whatever appears on the broadcast networks, without paying the networks anything. And the federal courts, so far, have sided with Aereo, effectively trampling on the property rights of the Big Four networks.
Understandably, the broadcast networks are not going to blithely submit.
Chase Carey, chief operating officer for News Corp., parent company of FOX, said last week that, if Aereo remains free to profit from unauthorized use of the network’s programming, it will not longer broadcast over the airwaves, but go exclusively cable.
“This is not an ideal path we look to pursue,” Carey said, “but we can’t sit idly by and let an entity steal our signal. We will move to a subscription model if that’s our only recourse.”
Such a move by FOX and, perhaps, the other three major broadcast networks as well, would not affect the 85 percent or so of households that are already subscribe to cable, satellite or fiber-optic pay-TV.
But it will be costly for the tens of millions of television viewers of fixed income who may not be able to afford pay TV.
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