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Aereo CEO Explains Why the Service Should Not Be Considered a Threat to Broadcasters SNL Kagan

Aereo CEO Chet Kanojia has been interviewed by SNL Kagan, and explains how he came up with the idea for the service, and why broadcasters should not consider Aereo a threat.

Deborah Yao of SNL Kagan introduces the interview by writing, "Aereo is shaking up the broadcast TV industry with a service that streams live television through the Internet to smartphones, tablets and other devices for consumers.

"Broadcasters were so upset that the four largest networks sued Aereo for copyright infringement weeks before its service even launched. But on Aereo's side are some big guns as well, notably Barry Diller, chairman of IAC/InterActiveCorp.

"Aereo is a disruptor on several fronts. Since it does not pay fees to broadcasters to reroute over-the-air TV signals to consumers, networks are concerned that it could interrupt the retransmission fee system. Aereo also appeals to cord-cutters by giving consumers one more tool to assemble their own customized à la carte offerings."

Some excerpts from the interview with Kanojia:

SNL Kagan: The main thing is broadcasters are afraid of a disruption in the retransmission fee system or worse.

Chet Kanojia: We're not an MVPD, we're not subject to retrans and also we don't have the benefits of program access. … For them to sit there and say Aereo can cause mass cord-cutting when Aereo cannot get programming like HBO, like ESPN, like Turner [Broadcasting System Inc.] … where are the antennas for that segment of population that has already concluded they don't want the cable for it or they never took it?

This is the same argument they used for VCRs, [that it will cause] the death of the industry, etc., and of course they make billions of dollars on home video. So to sit there presumptively and say that a technology that is intended for a niche is going to somehow destroy this whole industry is absolute ludicrousness.

On the contrary, what Aereo is doing is giving new users access to live [TV, and] that's just more eyeballs. … There's more opportunity for everyone.

SNL Kagan: Do you think you will prevail all the way based on Cablevision's legal victory in the network DVR case?

Kanojia: It's not just Aereo that is [banking] on the strength of Cablevision [Systems Corp.] Pretty much every cloud technology that's coming out in the content realm is taking advantage of that precedent. Companies like ours, innovative new companies that come in, rely on those various strong precedents to say, "OK, courts said X, so now we can invest." We didn't go around and create something foolish. … We studied it carefully and created something that is highly compliant.

Can you say a DVR cannot play back a live program? That's really what they're asking [the court] to do. What's the logic in that?

SNL Kagan also asked Kanojia, "How did you get the idea for Aereo?"

Kanojia answered, "I started a company prior to this, and in 2008 I sold it to Microsoft Corp. That company had pioneered viewership measurement on cable TV. All the major cable companies were our clients. We pioneered how to collect viewership data second by second in real time from millions of homes. As we looked at the data, it was sort of obvious that 80% of the people only watched seven or eight channels, and 27% of multichannel homes only watched broadcast. The lightbulb sort of went on: 'Look, there's a population of people out there that is using Netflix and Google and iTunes, etc., for parts of different things. The only thing missing in the online experience is this element of live broadcast.' "