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Upstart technologies threaten broadcast industry

By Catholic Online (NEWS CONSORTIUM)
April 8th, 2013
Catholic Online (www.catholic.org)

Two fledgling upstart technologies may very well turn the $60 billion-a-year television broadcast industry upside down. Both challenge the business model that has helped keep broadcasters profitable. One is a cut-rate service that filches broadcasts from existing TV antennas; the other blocks broadcast commercials, which defeat the purpose of an industry reliant on television.

LOS ANGELES, CA (Catholic Online) - The service Aereo offers a cut-rate TV subscription for consumers by capturing broadcast signals over thousands of antennas at one time. An appeals court earlier this month rejected a petition by the major broadcasters including Comcast's NBC, News Corp's FOX, Disney's ABC and CBS.

It was just the second time in recent months that TV broadcasters failed to block a new technology that undercuts revenue they generate for their television shows. A California court struck down Fox's request to ban Dish Network's ad-eliminating video recording device called the Hopper late last year.

The most touted feature of the Hopper makes TV commercials disappear completely when watching recorded prime-time broadcast television, unlike prior DVRs and other devices that require the viewer to fast forward through ads.

The two services strike at the heart of the TV broadcast model, whose future will be up for debate at the National Association of Broadcasters show in Las Vegas this week.

In addition, Aereo could cut the numbers of people who need or want a more expensive cable video subscription. This would cut into the $3 billion in so-called "retransmission fees" that research firm SNL Kagan says broadcasters get from cable and satellite systems.

The threats these technologies pose at the present remain limited. The number of people using Aereo, backed by media heavyweight Barry Diller, who launched the Fox network in 1986 is extremely minor compared to the number of pay TV customers in the United States. Dish's Hopper is a more mainstream device that Dish's 14 million subscribers have access to.

Broadcasters fear that these types of services will continue to expand, cutting into their viewing audience and advertising revenue.

Even though courts have made preliminary decisions in favor of Dish and Aereo, both cases are still in the early stages and those decisions could ultimately be reversed.

There is a positive side to this threat. If Aereo and the Hopper are successful, it would push TV operators to dramatically adapt, forcing them to trade in their broadcast towers and become cable channels alongside networks such as Bravo, AMC and ESPN.

Some of the top four major networks have been considering just such a move for months, and the emergence of the two technology threats could accelerate their decisions.

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