Fox, Aereo, and the End of TV

on April 8, 2013
Reading Time: 2 minutes

Aereo antenna array (Aereo, Inc.)

News Corp. Chief Operating Officer Chase Carey’s threat to pull the Fox network from the airwaves if Aereo wins its legal battle to retransmit over-the-air TV signals without paying for them is probably nothing more than bluster. But the fact that he could make such a threat with a straight face, and in front of the National Association of Broadcasters, no less, is a clear indication that the end of TV as we have known it is approaching.

The broadcast networks, especially Fox and the old big three of ABC, CBS, and NBC–are still tremendously important players in the TV world. Far more people watch their content than any of the cable-only channels. They still dominate news and live sports (though ESPN and to a lesser extent Fox have made significant inroads in the latter).

But over-the-air is no longer how they reach most of their viewers. And while we still think of broadcast TV as ad-supported, the retransmission consent fees paid by cable carriers–and avoided by Aereo–have become a tremendously important source of revenue to local stations. In a sense, they already are pay TV stations from the point of view of most viewers, and that is why  Carey’s threat is not an empty one.

What would it mean if over-the-air broadcast TV disappeared? For one thing, we could forget about the hideously complex incentive auction now being planned by the FCC to free a bit of the prime spectrum now occupied by TV stations for wireless data use and just turn the whole thing over to wireless.

Some of the more interesting consequences would be for politicians. Members of Congress depend on local stations to keep their names and faces in front of voters, especially as local newspapers fade away. Politicians are also the beneficiary of regulations that require local stations to sell advertising to candidates for federal office at the lowest rates they charge any customer. In fact, if stations stopped broadcasting over the air, the Federal Communications Commission would lose essentially all ability to regulate their content, rates, or much of anything else.

Even the most anti-regulation Republican doesn’t really want that to happen. That’s why Carey’s real audience may have been Congress. If Aereo wins in court, as seems increasingly likely, the broadcasters are likely to turn to Congress for relief. Carey’s statement was likely a shot across the bow in that fight.

But history has shown us that depending on favorable treatment from government to save you from the forces of change can work, but only for a little while. The times they are a-changing for television.