Diller: Online Video Should Be Subject to Same Obligations as Traditional Distributors

IAC chairman says that copyright law works well, just needs tweaking

By John Eggerton -- Broadcasting & Cable, 4/24/2012 1:34:39 PM

IAC Chairman Barry Diller told a Senate panel Tuesday that he thought the same rules and obligations that apply to traditional video distributors should be applied to online video services, though he also said he believed that should be light-touch regulation. Diller's point was that a level playing field was crucial.

Diller got an attentive, though not entirely receptive, audience in a Senate Commerce Committee hearing Tuesday (April 24) on "The Emergence of Online Video: Is it the Future?" He also had an attentive online audience.

After his comment about similar regulatory treatment for online video, one Comcast exec tweeted: "Diller supports legacy obligations on broadcasters and satellite to be applied to online video," while a cable association exec tweeted: "Level playing field = PEG, must-carry, leased access, program carriage, program access, privacy, franchise fees, etc."

Diller, former top Fox and Paramount exec, had definite ideas about the online video future, including that world-leading -- or no worse than second-place -- broadband access was crucial; that online video was a complement, rather than a direct substitute for traditional video distribution; and that without protections of network neutrality, traditional distributors like broadcasters and cable operators would tie "anchors and tin cans" around any competitor who tried to deliver content those legacy distributors did not own.

Diller said he thought copyright law was working pretty well and only needed tweaking, rather than what he said was the "ridiculous overreach" of the Stop Online Protection Act, legislation backed by studios but stopped by Google and other Web forces.

Diller made a pitch for his Aereo TV service, which charges for what he describes as access to a remote broadcast antenna and cloud DVR capabilities via the Internet, and what broadcasters suing him describe as retransmission of their signals without compensation in violation of copyright law. While Diller and broadcasters are currently at odds, since his service charges access to broadcast TV, Diller pitched the value of local broadcasting, saying he never held to the theory that it was outmoded, and that it continued to provide important local news.

Committee Chairman Sen. Jay Rockefeller (D-W.Va.) gave Diller a warm welcome, saying they had been together on a number of occasions and adding a shout-out for his expertise and experience, even saying to his wife -- noncommercial TV executive Sharon -- "hi."

Rockefeller was receptive to the prospect of over-the-top services, like those represented by other witnesses from Amazon and Microsoft, for potentially providing downward pricing pressure on cable bills, which he criticized as outstripping inflation. He also talked about getting 500 channels and only watching 10, but having to pay for them all.

Diller said that perhaps the biggest opportunity of the rise of Internet video delivery was the prospect of a la carte, of programming delivered in the narrowest of narrowcasts. Asked why an ESPN did not sell itself separately to consumers, Diller said they would be insane to do so, given the traditional model of 100% of cable subs having to pay for it whether or not they watched it or not -- Diller said he didn't.

Diller got a grilling from Sen. Jim DeMint (R-S.C.) about Aereo TV. After 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, DeMint probed his explanation.

The senator suggested Aereo TV was intercepting signals and retransmitting them, charging viewers for distributing a network while not paying content providers.

Diller countered that the service was not retransmitting or distributing content and was not a network. He said that if RadioShack 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, he said. 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 their business at all costs. But he said he would also recognize that the quid pro quo for their 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."

There were no broadcasters on the witness panel, but a broadcast exec with one of the companies suing Aereo said of the Diller explanation: "He is trying to make a buck without licensing the content that he is retransmitting.

"This is not about new technology. This is about trying to make money off of other's investment."

The DeMint exchange was the most heated of the hearing, with the balance featuring legislators trying to understand the impact of online video on cable prices, or what access or other regulations it should be subject to, or what it would mean to broadband build-out.

There were not a lot of definitive answers from the panel, comprising Diller, Blair Westlake, VP at Microsoft; Paul Misener, VP at Amazon; and Susan Whiting, vice chairman of Nielsen, beyond the agreement that universal broadband would be key to insuring that it was not a world of online video haves and have-nots.

Diller said flatly: "We do not have a first-rate broadband infrastructure in this country," and said universal broadband access "should be the law."

There was no talk about broadband usage caps and what effect that has on Internet video, a point Rockefeller made toward the end of the hearing. But there was a lot of talk about network neutrality.  Diller said that along with universal access, it was the other absolute necessity in an online video world.

Network neutrality needs to be safeguarded," he said, adding that there should be no toll bridges between producers and consumers. Misener said he agreed completely, while Westlake talked about a balanced approach, saying that is why Microsoft supported the FCC's compromise network neutrality rules.

"We have to protect network neutrality," said Kerry.