Fox threatens to become cable channel amid Aereo dispute

Mon Apr 8, 2013 5:10pm EDT
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By Liana B. Baker

LAS VEGAS (Reuters) - News Corp's Fox TV network raised the stakes in its battle with Web startup Aereo Inc on Monday, threatening to remove itself from the free airwaves entirely and become a cable channel if courts do not shut down the online TV service.

The comments by News Corp's chief operating officer, Chase Carey, were the strongest sign yet of network industry opposition to Aereo, which offers a cut-rate TV subscription for consumers by capturing broadcast signals over thousands of antennas at one time.

Carey's comments at an industry trade show came a week after a U.S. appeals court rejected a petition by broadcasters to stop the service, at least for now.

"If we can't have our rights properly protected through those legal and political avenues, we will pursue business solutions. One such business solution would be to take the network and turn it into a subscription service," said Carey, speaking at the National Association of Broadcasters show in Las Vegas.

The television industry is closely watching the case to see whether it could disrupt the traditional TV model. The industry sees Aereo and other similar services as a threat to its ability to control subscription fees and generate advertising income, its two main sources of revenue.

Aereo could cut the numbers of people who need or want a more expensive cable video subscription, which would eat into an estimated $3 billion that broadcasters will reap this year from cable and satellite systems in so-called retransmission fees, according to a projection by research firm SNL Kagan.

"It is clear that the broadcast business needs a dual revenue stream from both ad and subscription to be viable," Carey said.

Aereo is backed by IAC, a company chaired by media heavyweight Barry Diller, who actually was behind the launch of the Fox Network in 1986.   Continued...

Chase Carey, deputy chairman, president, and COO of News Corporation participates in a panel session at The Cable Show in Boston, Massachusetts May 23, 2012. REUTERS/Brian Snyder