FOX vs Aereo update: could FOX become a subscription channel?


Chase Carey


Why, after over twenty-five years of successful networking, would the FOX Broadcasting Company be considering taking their FOX network into a paid-subscription model, similar to AMC or HBO? What on earth could force News Corp. Chief Operating Officer Chase Carey (the man with the impressive moustache, pictured above) to consider altering the entire American television landscape by altering FOX to a cable subscription rather than a broadcast network? The answer to both these questions is a small upstart redistribution company based out of New York called Aereo.

AereoAereo is a technology company based in New York City that decided to use their technological expanse to provide a service: for a monthly subscription fee, Aereo's customers can watch broadcast network television at various time-shifts (in case your schedule causes you to miss your favorite shows) on any internet-connected device, be it your smartphone, computer, or certain televisions. This subscription to Aereo costs far less than a network cable package, making Aereo an attractive option for those within range of the New York City signal--meaning Aereo's presence in the marketplace is siphoning viewers away from FOX and each of the other broadcast networks.

Unsurprisingly, Aereo was immediately sued by CBS, NBCUniversal, Disney (who owns ABC), and Newscorp (who owns FOX). Far more surprising is the ruling: on April 1 a federal court ruled in favor of Aereo, determining that their rebroadcasting of these network shows does not constitute copyright infringement. How is that possible?

Aereo's technology allows subscribers to view live broadcast content and to record it for later viewing. The way Aereo accomplishes this service is via a strategically-placed array of antennae, each about the size of a coin. The array picks up the broadcast signal being sent from each network to their various affiliates across the nation--however at present, Aereo's array is only strong enough to redistribute the signals throughout New York and Connecticut. Aereo's defense is that they are merely providing a service that any person could accomplish for themselves with an antenna and a recording device, and that their redistribution does not constitute a public performance.

Anyone with an antenna can pick up a TV station’s signals for free. But cable and satellite companies antenna arraytypically pay stations and networks for the right to distribute their programming to subscribers. Industrywide, those retransmission fees add up to billions of dollars every year. According to Newscorp's Chase Carey, not being paid by Aereo jeopardizes the economics of broadcast TV, which relies on both retransmission fees and advertising.

Yesterday Carey spoke at the annual gathering of broadcasters, called NAB Show, in Las Vegas:

"This is not an ideal path we look to pursue, but we can’t sit idly by and let an entity steal our signal. If we can’t do a fair deal, we could take the whole network to a subscription model."

Does this seem like tough-talk posturing or is it an actual option on the table for the future of FOX? Currently, Fox sends its signal to TV stations across the country, including 27 that it owns directly. Those stations broadcast FOX to their local markets--and they pay Newscorp for the privilege to do so. Aereo takes broadcast signals for free from the air with thousands of little antennas, recodes them for Internet use and feeds that to subscribers’ computers, tablets and smartphones for a mere $8USD/month.

Gordon Smith, president of the National Association of Broadcasters, does not want to see FOX switch to a subscription model, a precedent-setting move that could mean major changes across all of American television. Smith said he hopes that the courts will eventually rule against Aereo and force it to get in line with other pay TV operators.

The present American law governing cable retransmission fees was enacted in 1992; needless to say, technology, society and the way we view content has been completely altered over the past twenty-one years. Is it time for congress to update a superannuated law?

No matter what happens, it will have to happen soon: Aereo, backed by billionaire Barry Diller, was limited to New York City when it debuted early last year, but has since expanded to the New York City suburbs, including parts of New Jersey and Connecticut. It plans to expand to Boston, Chicago, Philadelphia, Washington and 18 other U.S. markets this spring.



Written by: bad_subject
Apr 9th, 2013, 9:53 am

Images courtesy of FOX


Level 43 (67%)
Points: 26352.8
Since: 27/Jan/06
Message Posted On Apr 15th, 2013, 7:18 am

While I am not an expert on TV stations, I think it is a bit more complicated than that. If "they" means a broadcast network such as FOX, then the only commercials they make money off of is their national feed, which is much less airtime than that of ABC, CBS, and NBC. A TV Station airs syndicated programmes and local programmes and also airs local commercials which it makes money off of directly. If the TV station is an affiliate, it has to pay for the national feed of a Broadcast service. This is different with Owned and Operated TV stations.


Commercials help pay for TV shows and there are also stations that make money in other ways such as Cable Networks. Some of the Cable channels make money ONLY from the fees paid by the Community Antenna Television providers, DirecTV, Dish Network, Sky Angel, Netflix, and other subscription services. Examples have been (I am not sure if this is true today) American Movie Classics, and The Disney Channel. Last time I bothered to watch The Disney Channel, it did not have ANY commercials. The intermissions consisted of ads for their own TV shows and movies but nothing else.


Aereo is just like another subscription service. They are charging people to use their service. They are charging people to watch FOX. It sounds like Aereo is not as innocent as they claim to be. Their response would be valid if they DIDN'T Charge People! So this is why FOX got mad.


My solution is FOX should just overtake Aereo. They should buy Aereo. And FOX certainly does not need to charge people no matter which method is used to watch FOX.


What would happen to all the affiliate TV stations? What would happen to the Owned and Operated TV stations? My favorite is KDFW, which airs local FOX Newscasts and a few national correspondents such as Neil Cavuto and Chris Wallace. It is the closest thing I get to Fox News. Fox News is not aired on FOX stations with the exception of ONE program aired WEEKLY. When FOX launched more news programmes, they decided to launch 24 hour cable networks and focus on news for the FOX stations later. They leave it up to the local stations which took YEARS for the stations to provide newscasts. I think there are STILL some Fox Affiliate stations that don't broadcast news! On the other hand, the Owned and Operated FOX stations have hours of newscasts. Almost 50% of their programmes is news. What would happen to FOX 4 News? What would happen to KDFW?! 


FOX News is different from other news. I trust them the most. (The only annoying thing they do is promote American Idol as "news".) I do not subscribe to CATV / Satellite, and I don't plan to. It is not right for FOX to force people to choose between paying a bunch of money for all of those silly channels, or being left in the dark. 


Level 1 (18%)
Since: 03/Feb/13
Message Posted On Apr 10th, 2013, 5:17 am

re-transmission fees are a lot of nonsense. they earn from commercials.


if anything they should be paying the cable providers


Message Posted On Apr 9th, 2013, 4:57 pm
He looks like a villian with that mustache...And I think he is....

Level 4 (93%)
Since: 02/Aug/12
Message Posted On Apr 9th, 2013, 1:28 pm

Interesting. I doubt Fox does it, but its an interesting concept.

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