Editorial: Clouded Visionary

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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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