Cable Satellite Providers May Clone Aereo

The face of broadcast television, at least the part that makes money from cable and satellite providers, may be about to change. Bloomberg reported that DirecTV DTV, Time Warner Cable TWC and Charter Communications CHTR, are looking into capturing broadcast-TV signals in the same way startup Aereo does. If they do, this means they would stop paying retransmission fees to networks and media companies.

Everything hinges on the courts and how they eventually rule regarding the legality of Aereo’s current practice of picking up over-the-air signals and sending them to customers via the Internet.

Aereo bills their customers $8 a month for providing online access to the signals. They pay nothing to broadcasters (unlike cable and satellite providers who pay a retransmission fee). Naturally, CBS CBS and other broadcasters object to this practice and have filed suit against Aereo.

Related: What is Aereo and Why are Network Executives Up in Arms About It?

Bloomberg sources said Time Warner Cable might just “cut to the chase” and buy Aereo, especially if the company wins out in its court battles. Time Warner and other operators alternatively could build their own versions of Aereo, thereby avoiding the retransmission fees, which are expected to reach more than $6 billion by 2018. Cable and satellite providers currently pay a little more than $3 billion in fees.

Aereo is up against some major players in their fight to continue snatching programming off the airwaves. Companies include The Walt Disney Co. DIS, 21st Century Fox FOXA and Comcast CMCSA’s NBCUniversal.

BTIG LLC analyst Rich Greenfield told Bloomberg, “This threatens the retrans gravy train. As Aereo continues to win legal battles, it’s becoming more apparent it could survive these challenges.”

In addition to fighting in court, media companies are threatening to take their signals off the air and move them to cable, making it impossible for Aereo and others to pick them up for free.

Fox President and chief operating officer, Chase Carey said in April that if Aereo is permitted to continue, Fox would move its entire network to cable. CBS CEO Les Moonves said his company would do the same, and so did Univision chair, Haim Saban.

The Los Angeles Times pointed out that broadcasters like Fox and Disney also already own popular cable channels that they could withhold from any cable or satellite provider who tried to avoid paying retransmission fees for the regular broadcast channels.

As with most major battles, it might all boil down to who blinks first.

At the time of this writing, Jim Probasco had no position in any mentioned securities.

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Posted In: NewsEventsMedia21st Century Fox Inc.Aereobroadcast televisionBTIG LLCcableCBS Corp.Charter Communications Inc.Chase CareyComcast Corp.DIRECTVHaim SabanInternetLes Moonvesnbcuniversalretransmission feesRich GreenfieldsatelliteThe Walt Disney Co.Time Warner Cable Inc.Univision
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