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Editorial: Clouded Visionary

4/30/2012 12:00:00 AM Eastern

Barry Diller got something akin to the red carpet treatment on
Capitol Hill last week. As a former broadcast executive and studio
executive now currently immersed in the online world of
search—and, broadcasters would argue, “destroy”—Diller was
a natural choice to weigh in on the emergence of online video.
Betting against his instincts has not built any nest eggs.

Diller, it turns out, is an old friend of Senate
Commerce Committee Chairman Jay Rockefeller
(D-W. Va.), who called him a “sublime” witness.
To be fair, Rockefeller called the Amazon, Nielsen
and Microsoft executives on hand sublime as well,
but he seemed to have a particular fondness for
Diller and started the hearing by saying his wife,
noncom station exec Sharon Rockefeller, said “Hi.”

Diller was given plenty of time to pitch Aereo
TV, essentially providing a
guided tour of the history
of video content delivery.
He paused to point out that
content suppliers tried to
kneecap the VCR as a home
recorder back in the day,
then talked of the rise of the
Internet as a disruptive technology
that scared the hegemonists
of traditional broadcasting
and cable delivery.

Diller sounded all the right
notes, saying a la carte was
likely the biggest value added
of online delivery. Ironically,
since his Aereo TV model
means to get subscribers to
pay for access to broadcast
TV stations, he came not to bury the medium—at
least not rhetorically—but to praise it.

But regardless of what new-style emperor clothes
Diller tried to offer up, he does not believe, or at
least will not concede, that his online service is distributing
or retransmitting anything. He says it is
only the combination of remote access to an overthe-
air antenna, which viewers are entitled to, plus
a cloud DVR function that allows viewers to untether
themselves from the time restrictions of linear
TV, much as the VCR did for home tapers.

Senator Jim DeMint (R-S.C.) tried to poke some
holes in that story (see Washington Watch), but he was a lone voice.

Beyond DeMint’s line of questioning—which
Diller countered by claiming he was neither a
network nor a distributor, nor, heaven forbid, a
retransmitter—no other challenge was offered at the
hearing. The main thrust of the proceeding was a
scattershot of questions about whether online video
would mean less crude programming—given what’s
online, that would seem a long shot—or help lower
cable prices or drive broadband adoption or drive
a wedge further into the digital divide between rich
and poor, rural and urban. All good questions.

But what was missing were witnesses from traditional
distributors like cable and broadcast and satellite
operators, who we are sure have plenty to say on
these matters. Actually, there
still weren’t any comments
late last week in the FCC’s
inquiry on the definition of
MVPD in an OVPD world,
but the FCC has delayed
the comment deadline from
April 30 to May 14, so we
still expect plenty of word.

We were disappointed
to learn that the committee
had no plans for a follow-up
hearing on the issue with
witnesses from TV or cable
networks, stations or MSOs.
Rockefeller said last week
that the hearing was supposed
to be the beginning of
a conversation, but it sounded
more like a PSA for online distribution and network
neutrality, plus a chance to beat up traditional
distributors as protectionist and obstructionist.

A court will ultimately decide whether Diller
is an online retransmitter trying to avoid paying
for content, or simply the facilitator for remote
users of really tiny antennas and cloud recording
technology. But if he wins, as one broadcast
executive pointed out last week, it could seriously
damage the future of broadcasting and the
economic model that supports it.

Another veteran broadcast exec put it this
way: “As Congress and the Supreme Court have
recognized, 'the importance of local broadcasting
outlets can scarcely be exaggerated, for
broadcasting is demonstrably a principal source
of information and entertainment for a great part
of the nation’s population.’”

We agree. That executive: Barry Diller.

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