The Aereo Decision

The Supreme Court ruled today that Aereo, using its unique cloud-based architecture, violated copyright laws when retransmitting over-the-air broadcast signals to customers with Web-enabled devices (TVs, tablets, smartphones).  Broadcasters claim that this was a “win” for consumers.  Was it?

The 1992 Cable Act detailed the rules covering retransmission consent.  But, it wasn’t until the early 2000s that TV stations began demanding retransmission fees from MVPDs for the rights to carry their signals.  Today, those fees can be as much as $1 or more per subscriber.  Moreover, TV stations now earn about 15% of their revenues from these fees and have the expectation that the percentage will go up as these fees increase significantly in the coming years.   No doubt the TV stations and broadcasters won big today. 

So did the MVPDs.  While consumers can still get over-the-air broadcast signals for free by having an antenna on their property, less than 10% of households rely on this method exclusively.  For everyone else, the broadcast channels are bundled in with the video packages purchased from an MVPD provider. If the Aereo business model was allowed by the courts, some of them might have been tempted to cut the cord.  For firms, like Comcast, there is an additional benefit as the threat of losing retransmission fees paid to its NBC network affiliates has gone away.

The appeal of Aereo was that it brought with it the possibility for lower MVPD bills for consumers and more choices in how to receive and pay for desired programs.  Today’s decision removes that possibility for now, but hopefully it does not discourage other firms from trying to develop technological solutions that respect copyright laws while providing consumers with lower priced video options.