Post #5 – Aareo: Is it time for Broadcasters to stop broadcasting?

Aareo’s success in the courts has rattled broadcasters, who have vowed to fight on. The question is, should they bother? According to the FCC last year, less than 10% of broadcast viewers do it over-the-air. The rest do their viewing over cable, for which the cable companies are paying broadcasters something less than $2 billion in retransmission fees.

To step back a second, Aareo is a start-up from Barry Diller’s IAC that uses many tiny antennas to offer people local broadcast stations streamed over the Internet. But viewers can also get those stations for free by buying cheap digital antennas and, for older TVs, converter boxes. As noted, relatively few have done so.

The networks think Aareo could undermine their ability to negotiate retransmission fees. The cable companies believe the combination of Aareo and Netflix/Hulu could increase their cancellations by cord cutters.

Perhaps the networks should rethink their strategy. If they moved their programming exclusively to cable, most notably the local news, that content wouldn’t be available to Aareo or via over-the-air channels. It would become even more valuable to the cable companies. Broadcasters would lose less then 10% of their audience, some of whom would likely switch their cable back on. The cable MSOs should be eager to convince the broadcasters to become less broad. For NBC, it’s an in-house decision.

At some point, they all might even be tempted to give up the expense of maintaining transmitters and turn their licenses in to the FCC.

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