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Wow: News Corp. Threatens to Take Fox Off as Free, Over-the-Air Broadcaster and Make It a Pay Channel as Dispute With Aereo Heats Up. Univision Owner Makes Similar Threat THR, USA Today

"Media company stocks rise as News Corp.'s Chase Carey, Univision's Haim Saban threaten to pull the plug on over-the-air broadcasting because of court wins by Barry Diller's Aereo," reports The Hollywood Reporter.

The story continues: "Wall Street observers Monday said that News Corp.'s threat to retool Fox from a broadcast network into a pay-TV channel in order to counter Barry Diller's Aereo was a real possibility, but would likely only happen as a last resort. Most predicted that the broadcaster would take its time and await future court decisions given the likely near-term financial hits of viewers and advertising caused by such a change."

The story then quotes some media analysts. " 'I think it is quite plausible that Fox would do that if the courts fail to appreciate Aereo’s free-rider strategy,' Wunderlich Securities analyst Matthew Harrigan said of Fox’s threat to move from free to pay TV. But the company’s finances 'would probably hurt mildly' over the short term as it 'would take a while for even higher subscription revenue to make up for losing off-air access.' "

And: "Sanford C. Bernstein analyst Todd Juenger, in a report at the beginning of the year, wrote that if all four big broadcast networks moved from over-the-air to pay-TV business models, lost retransmission fees paid by pay-TV firms and lower advertising revenue could be replaced by higher total revenue from affiliate fee and ad dollars, but only over time.

" 'The more real the prospect of Aereo becomes (or any other similar concept which might come forth in the future), the more likely the networks might dust off their old spreadsheets and reconsider the "broadcast-to-cable" conversion math,' he wrote in a note, which he re-sent to investors Monday. 'After all, if there were no free over-the-air signal, then there would be no Aereo.'"

The dispute between broadcasters and Aereo is back on the front pages because, as previously reported, a federal appeals court, on April 1, backed an earlier court ruling in favor of Aereo. That report quoted USA Today as reporting, "The decision from the U.S. Court of Appeals for the Second Circuit, in New York City, affirms an earlier ruling that Aereo doesn't violate the broadcasters' copyrights in airing programs over the Internet from its farm of mini-antennas in Brooklyn." 

Reacting to the latest ruling was News Corp.'s COO Chase Carey, THR reported: "Addressing the situation at the National Association of Broadcasters' annual gathering in Las Vegas on Monday, April 8, 2013, Carey partly endorsed free TV, but issued a threat: 'We can’t sit idly by and let someone steal our signal. We like the broadcast business, and if we can affirm our rights, that is a path we prefer to pursue.' [Carey added,] “We need to be able to be fairly compensated for our content. A dual revenue stream [with subscription fees (via retrans agreements) and advertising] is critical."

Univision owner Haim Saban added, according to the Reporter story: " '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,' Saban said Monday. '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 our community.' ”

We urge you to click on the link in our first paragraph, above, to the original story in THR and read the complete article.