Aereo, a technology company
that re-transmits over-the-air signals to multiple
devices of its subscribers, has been in the limelight for its legal
status since its inception last year. While broadcasters have been
in a legal battle against the company over copyright infringement,
Aereo continues to expand its operations geographically.
In light of the recent ruling by an U.S. appeals court, which
favored Aereo, broadcasters are weighing different strategies to
counter this new technology which can mark an end to the concept of
a re-transmission consent fee. Disney (
) has taken an aggressive approach and recently announced free live
streaming over its apps on multiple devices, which it will later
limit to pay-TV subscribers.
See our complete analysis for Disney
Live Streaming of ABC
Starting this week, Disney's ABC will begin live streaming of
its entire programming schedule. Streaming will be available on its
app for tablets and smartphones in New York City and Philadelphia
for now. This feature will be free to start with, but come July,
Disney plans to limit the service to authenticated pay-TV
subscribers. Subscribers will then have to use their pay-TV
accounts to connect to the stream.
The penetration of tablet and smartphones has increased in the
U.S., which has led to a change in customer preference of watching
television remotely, rather than just at home. The pay-TV operators
are building on the concept of 'TV Everywhere', which will allow
subscribers to access content on multiple devices remotely.
However, Disney's move is the first instance of any broadcaster
offering 24 hours of live streaming.
Aereo offers live as well as time-shifted viewing of
over-the-air channels. Its target customers are cord-cutters who
don't want to pay expensive cable bills or the ones who wish to
access entertainment content remotely. The broadcasters such as
) Fox, Disney' ABC and Comcast's (
) NBCUniversal have made an unsuccessful attempt to shut down
Aereo, as an appeals court denied such injunction in the 2
While the broadcasters claim that the Aereo is stealing their
signal and re-transmitting it to public resulting in copyright
infringement, Aereo claims it is using freely available
over-the-air signals through tiny antennas and transmitting it only
to its subscribers. ABC on the other hand will be using much
cheaper cloud technology to deliver its live stream unlike Aereo's
setup of tiny antennas. It is clear that the feud between the
broadcasters and Aereo will continue for some time and the Supreme
Court may intervene at some stage. Until then Aereo continues to
This move by Disney could well start a trend where the
broadcasting networks will be available freely for streaming
thereby limiting the growth of Aereo.
Is It All About Re-transmission Consent?
Re-transmission consent refers to the provision that requires
cable and MSOs (multi-service operators) to obtain permission from
broadcasters before carrying their programming. Usually these
operators would pay cash to the broadcasters in exchange of
carrying their programming. If Aereo's business model wins the
legal battle then it could open the door for other pay-TV operators
either to partner with Aereo or create a similar technology of
their own, thereby bypassing the need to pay any re-transmission
The re-transmission consent fee is estimated to surpass $6
billion by 2018, and so there is clear reasons for broadcasters to
go after Aereo. Time Warner (
) recently stated that it would start an Aereo like service if its
legal status becomes more convincing. It will be interesting to see
how broadcasters respond in this feud against Aereo. While ABC is
starting its own streaming, Newcorp's Fox has threatened to
transform into a cable only channel.
Our price estimate for Disney stands at $66
, which is roughly in line with the market price.
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