This a setback in what the networks see as an effort to protect their main products, their programming. However, Newscorp, the company that owns and operates 17 Fox and 10 MyTVNetwork stations across the US, has suggested a drastic solution to Aereo: pulling Fox programming from the airwaves altogether.
Speaking of the court's ruling at the annual National Association of Broadcasters gathering in Las Vegas, Newscorp COO Chase Carey said, "This is not an ideal path we look to pursue, but we can't sit idly by and let an entity steal our signal." He went on to say, "If we can't do a fair deal, we could take the whole network to a subscription model."
A large number of Americans subscribe to some kind of pay television service, whether it be satellite, cable or a fiber optic service provider like FiOS or UVerse. In order to provide these signals to their customers, television service providers must pay for the privilege to do so in the form of re-transmission fees. Makes sense, right? A cable provider sells access to a station and makes money, so should the station not be compensated? Local stations are used as a selling point for subscription TV services, so the common logic is that stations should share in those profits.
But many Americans still rely upon an antenna to watch television. Millions of Americans don't pay for television because they either can't afford it or simply choose not to. I bring this up because it helps explain how local TV makes the bulk of its money: through the sell of advertising.
In advertising, the easier access one has to an entity that distributes ads ensures that those ads reach the most people. It's a model almost every free weekly metropolitan newspaper understands: if I give away my newspaper, more people will be inclined to pick up a copy. Therefore, my advertisers have better and wider access to readers.
This model works with TV. If I can't or won't pay for TV, I know I can always take out the old rabbit ears and pull in the evening news or American Idol for free. Satellite or none, if I want to watch Criminal Minds or Scandal, it's there. And so are the ads that air with the programs.
Back to Fox. I'm calling Mr. Carey's bluff on this one; Fox pulling programming from the airwaves makes as much sense as shooting yourself in the foot. I do not see this happening. But if it did happen, where would that leave Fox as a terrestrial broadcast entity? Would Fox create another cable service like FX and move its primetime network programming there, and maintain its broadcast stations according to a different programming model? Or would the Newscorp stations simply disappear from the airwaves and be offered only to cable and satellite subscribers?
With the exception of WOGX in north central Florida, all Fox owned stations produce local news. Local news ratings are used by stations to set ad rates for local and regional advertisers. If Fox goes pay TV, that ad model would change completely, because the large portion of non-pay TV household would most likely not be willing to start paying for TV because of the loss of one local station. That's means all programming, including news and everything else, loses a chunk of its audience. Free TV means free access to advertising.
But like I said, I'm not convinced any situation like this will become a reality.
But I must touch on Aereo. Aereo claims that the reason no copyright infringement occurs is because they have thousands of "mini-antennas" that provide the signal that is streamed to each individual subscriber. The service offers all sorts of fancy bells and whistles such as time shifting and DVR space, but I must ask this: how does one take a signal from over-the-air and initially resell it to someone? The network programming is the draw here; folks aren't paying to see reruns of "My Little Pony" or Mexican soccer. The mere existence of Aereo proves the worth of local network affiliates.
Why does Aereo have the right to charge people for something that they didn't pay for and that's copyrighted? What's wrong with the networks restricting the way their programming is distributed? If the networks want local affiliates to broadcast their signal over-the-air, fine. If the affiliates want to make deals with cable companies over re-transition, fine. Isn't it only fair that Aereo pay for the right to redistribute network/affiliate programming? When will Aereo reach out to stations and work out some kind of deal? That way, everyone gets paid and everyone is happy.
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