October 27, 2013
Time Warner Cable, DirecTV Considering Shift To Streaming Services
redOrbit Staff & Wire Reports - Your Universe Online
DirecTV, Time Warner Cable and Charter Communications are reportedly considering adopting Aereo-style streaming options, capturing free broadcast TV signals in order to avoid or eliminate retransmission fees.
Those fees, which allow the television service providers to re-broadcast network television feeds, cost cable and satellite companies billions of dollars, according to Bloomberg reporters Andy Fixmer, Alex Sherman and Jonathan Erlichman. Now, they are said to be considering switching to Aereo’s business model to save money – provided the firm is victorious in an ongoing court battle over the legality of its streaming service.
Should Aereo, which charges customers $8 per month for online access to broadcast television, emerge victorious from its legal battle with CBS and other media firms, it would open the door for cable and satellite companies to “use the same approach to bypass the fees they now pay for network signals,” sources, requesting anonymity because of the early stage of the discussions, told Fixmer, Sherman and Erlichman on Saturday.
Furthermore, CNET’s Donna Tam noted that there has even been some discussion of Time Warner – which itself has been at odds with CBS – flat-out buying Aereo, which uses small antennas to capture the signals of free, live, local broadcasts and transmit them to subscribers via the Internet.
“If Aereo should win out in court, the traditional business model that currently rules television would essentially be upended overnight: Time Warner could simply snatch free broadcast signals out of the air and direct them to customers without fear of legal repercussions (though networks would undoubtedly work every possible legal angle in response),” Bryan Bishop of The Verge explained.
Bishop added that some executives, including Chase Carey of Fox and Les Moonves of CBS, have warned that they will make their networks cable-only should they lose the ongoing legal battle with Aereo. Were that to happen, he said, it would “make sense” for those executives “to make good on their threats.”
According to Bloomberg, US retransmission fees are expected to more than double over the next five years, from $3.01 billion to $6.1 billion in 2018. If providers such as DirecTV, Time Warner Cable and Charter Communications switch to a business model that does not require them to pay those fees, then the only way networks such as CBS and Fox could “maintain the value of their programming would be to remove it from the free airwaves, operating instead like cable-only networks such as AMC or CNN,” Bishop said.