Peter Kafka

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News Corp. Threatens to Pull Fox off the Airwaves if Aereo Wins

Chase CareyGoodbye, free TV?

News Corp. COO Chase Carey said his conglomerate is considering moving programming from its Fox broadcast network, which viewers can receive over the air, for free, to its pay cable networks.

Carey floated the idea during a speech at a TV industry conference today, in response to a recent court ruling that gave startup Aereo the go-ahead, at least temporarily,  to show programming from Fox and other broadcasters on its Web TV service, without paying for the shows.

Here’s the money quote, via Variety:

“If we can’t have our rights properly protected through legal and governmental solutions, we will pursue business solutions. One solution would be to take the network and make it a subscription service. We’re not going to sit idly by and let people steal our content.”

If Carey and News Corp. (which also owns this website) follow through on the move, it would be a dramatic response to Aereo, which irks the broadcasters because it threatens billions of dollars in “retransmission” revenue.

The broadcasters get that money from pay TV operators, who pay for the right to carry network programming even though it’s available for free to anyone with antenna.

Moving programming to cable networks, which you can’t get unless you pay a subscription fee, would theoretically protect the value of that programming. But it would presumably come at a cost to Fox, as it would lose access to the 10 percent or so of American TV viewers who don’t have a pay TV subscription.

Given that Aereo and the broadcasters are still duking this out in court, and that Aereo has a small subscriber base at best — for now, it’s only available in the New York area, although the company has a big rollout planned this year — you can probably file this under “sword-rattling aimed at regulators” more than “things Fox actually intends to do.” (Wall Street, meanwhile, likes what Carey has to say.)

But it’s still a fascinating public response. Here’s more, via a News Corp. PR statement:

“News Corporation has a long-standing commitment to the broadcast television business, and to delivering the highest-quality entertainment, sports and news programming to our viewers on a localized basis. We are committed to broadcasting under a business model where programmers receive fair compensation from parties that want to redistribute our product while continuing to make our product available for free to individual consumers that want to access our signal.

“We believe that Aereo is pirating our broadcast signal. We will continue to aggressively pursue our rights in the courts, as well as pursue all relevant political avenues, and we believe we will prevail.

“That said, we won’t just sit idle and allow our content to be actively stolen. It is clear that the broadcast business needs a dual revenue stream from both ad and subscription to be viable. We simply cannot provide the type of quality sports, news, and entertainment content that we do from an ad supported only business model. We have no choice but to develop business solutions that ensure we continue to remain in the driver’s seat of our own destiny. One option could be converting the FOX broadcast network to a pay channel, which we would do in collaboration with both our content partners and affiliates.”

And here’s a statement from Aereo PR rep Virginia Lam:

“Aereo has invented a simple, convenient way for consumers to utilize an antenna to access free-to-air broadcast television, bringing television access into the modern era for millions of consumers. It’s disappointing to hear that Fox believes that consumers should not be permitted to use an antenna to access free-to-air broadcast television. Over 50 million Americans today access television via an antenna. When broadcasters asked Congress for a free license to digitally broadcast on the public’s airwaves, they did so with the promise that they would broadcast in the public interest and convenience, and that they would remain free-to-air. Having a television antenna is every American’s right.”

UPDATE: News Corp. isn’t going alone on this one – while none of the traditional networks have chimed in to support the company’s stance publicly, Spanish-language broadcaster Univision is making the same argument. Here’s a statement from chairman Haim Saban, who is making a habit of aligning himself with Rupert Murdoch.

“Simply put, we believe that Aereo is pirating broadcasters’ content. As Chase Carey said, no broadcaster can afford to sit idly by and allow Aereo’s theft to continue unchecked. To serve our community, we need to protect our product and revenue streams and therefore we too are considering all of our options — including converting to pay TV. With Hispanics watching over-the-air news and entertainment at twice the rate of non-Hispanics, being forced to convert to cable would significantly impact this community.”

And finally, here’s an interview I conducted with Aereo CEO Chet Kanojia in February’s D: Dive into Media conference, where he showed off the service and talked about its long-term programming plans.

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