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

Apr 9, 2013  •  Post A Comment

"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.

3 Comments

  1. Once again the big networks are failing to see the big picture here, it is services like Aereo that HELPS the networks gain viewers in their area.
    In many areas where you are supposed to get a off air signal you can’t. Aereo is helping broadcasters get their signal in their local viewers homes.
    These signals are NOT being seen outside the DMA.
    Networks are not losing any money here, since they are supposed to be blanketing the area with signal. Instead what they are getting is more eyeballs to view their shows and most importantly commercials.
    If I was a broadcaster I would be happy they were helping me get my signal out to my viewing area!

  2. No matter how you look at this issue, at each 90 degree angle of the circle, all you see is money flowing deliciously into the insatiable mouths of big media.
    At issue is control (and ownership) of the largest “piece of this media-money pie”.
    Serving the needs of the public-at-large is truly secondary to the money-power issues of the elite management people and their ever greedy stock holders.
    The age old adage, “when in doubt, follow the money trail”, was never more applicable than here with this issue.
    You’d think by now, with all his personal wealth, Diller might actually become an advocate for what is truly right for the nation. He’s still that kid at William Morris out to get ahead…for himself.
    Peter Bright

  3. This isn’t necessarily a reply to you, but I have news for everyone. I work for a cable TV company and we already pay for broadcast channels as part of transmission agreements, regardless of whether the subscriber wants the channel or not. Personally, I think going to a quote, un-quote, pay service is the best thing thant way consumers can get the channels they want and not the other jumk. That’s my 2 cents worth.

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