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Following a recent court decision favoring Aereo's Internet-based, royalty-free retransmission of broadcast television, Fox warned it may pull its freely available NY-area broadcast channel in favor of a subscription-only model. CBS claims it too is mulling over a similar move to ensure it remains paid for its content.
"We need the dual revenue stream model of retransmission fees and advertising to sustain our business," said News Corp. Chief Operations Officer Chase Carey. News Corp. is the parent company of Fox. "If we can't get our rights protected, we will pursue business solutions to take our network and turn it into a subscription service." Carey added.
Aereo is a controversial streaming service which delivers locally broadcasted television to native subscribers via their Internet connection. To skirt legal complications inherent to rebroadcasting third-party content without permission, Aereo has engineered antenna arrays with thousands and thousands of diminutive receivers. By maintaining at least a 1:1 ratio of antennas to local subscribers, Aereo bills itself as more of a "conversion" service than a rebroadcaster. It is attempting to navigate a mostly untested legal mine field by claiming its subscribers "own" an antenna and the medium upon which the broadcast is delivered is irrelevant.
Although local broadcast TV channels are free, Aereo costs money: $12 per month or $80 per year. Part of this is used for infrastructure, operating costs and value-added services like DVR capability, but there is almost certainly profit to be made here. The company contends it provides a valuable service to New Yorkers who suffer from poor reception or simply don't have a television set.
For now, the service primarily operates in New York; however, Aereo is set to expand to over 22 major cities including Miami, Detroit, Washington D.C, Pittsburgh and Dallas.