Broadcasters Aereo Their Grievances

Diller gets warm Hill welcome; broadcasters remain hot and bothered

The Senate Commerce Committee gave Aereo TV investor
Barry Diller a platform last week to promote his antenna farm/online
TV station subscription service, which launched last month to
a chorus of broadcasters crying foul, with a few
immediate lawsuits tossed in for good measure.

However, Diller found a much warmer welcome
from Commerce Committee chairman Jay
Rockefeller (D-W. Va.), who called him one of
the committee’s “sublime” witnesses. Rockefeller
added that he had known Diller for many years
and even mentioned that his wife—noncom
exec Sharon Rockefeller—said “Hi.”

On so prominent a platform, Diller talked
about the hegemony of traditional distribution
that the disruptive nature of the Internet was
a threat to, suggesting that if he were a broadcaster,
he would have done exactly what they
are doing now by trying to protect their arena
and tie “an anchor and tin cans” on anyone
trying to muscle in on their turf.

But Diller’s voice did not go unchallenged.

Ironically, Senator Jim DeMint (R-S.C.), who
has otherwise discom! ted broadcasters with
his bill to scrap retransmission consent (something
he pitched at last week’s hearing), probed
Diller’s argument.

The argument goes that Aereo TV is a natural evolution of content
delivery, similar to the rise of home recording, which content creators
and distributors fought—and lost—in the Betamax case.

DeMint, ranking member on the Communications Subcommittee—
who could be in line for ranking member or even chairman of the full
committee, depending on how the election goes—saw it differently.
DeMint asserted that Aereo TV appears to be intercepting signals and
retransmitting them, charging viewers for distributing a network while
not paying content providers. 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.

Diller insisted that DeMint was wrong on all counts. He said the service
was not retransmitting or distributing content and was not a network.
He likened Aereo TV to a Radio Shack antenna, and said that if Radio
Shack 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, Diller added. 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 the core business at all costs. But he
insisted he would also recognize that the quid
pro quo for broadcasters’ 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,” he said.

There were no broadcasters, or cable operators
for that matter, at last week’s hearing, and
a committee source said there were currently
no plans for a follow-up hearing featuring
members of either group.

But, speaking on background, a broadcast
executive from one of the many companies
suing Aereo had plenty to say. “The notion of
100,000 dime-sized antennas in a warehouse in
Brooklyn is baloney,” the exec said. “What they
are trying to do is conceal and camou" age a
retransmission service by way of streaming and
pretend it is something else. If they were honest
about it, they would license the content.”

Diller—in essence, using the popular “You
say ‘to-MAY-to’” defense—further pitches that
Aereo, with its combination of antennas, DVR functionality and online
distribution, is analogous to the time-shifting of programming via VCRs,
giving consumers the freedom to record a video program in advance and
watch it later, expanding consumer choice by untethering them from
schedules [and in Aereo’s case, devices] determined by broadcasters.

To that, the broadcast exec responded: “The answer is, Netflix,
iTunes, Hulu are serious, honest advances in technology that license
content and deliver it by virtue of new technology to the consumer.
There is nothing new about streaming, and that is what Aereo proposes
to do. The only difference is, instead of licensing the content, they propose
to steal it. They are trying to skate through a loophole.”

While last week’s Senate hearing was more about talk than action on
online video, broadcasters are concerned about the ramifications of the
Aereo court case. Diller’s contention that he is not distributing or retransmitting
content also evoked another key concern: the FCC’s request for
comment on the definition of multichannel video programming distributor
(MVPD). That could determine whether online video programming
distributors (OVPDs) who do concede they are distributing content are
subject to retrans obligations.

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