Today, the Supreme Court ruled in favor of the broadcast networks in American Broadcasting Companies, Inc. v. Aereo, Inc. This was a clear loss for Aereo which will now need to either pay the broadcast networks retransmission fees like the cable companies do, or go out of business. This was a win for the broadcast networks only in the sense that Aereo will not be able to ruin the networks’ business model. It means that the networks will likely receive widely-expected increases in retransmission fees for another few years, and that consumers will see higher monthly cable bills.
In TV is Next, we wrote about customers’ desire to unbundle large expensive cable packages and only pay for the programming they want to watch. The fact that Aereo existed and grew quickly is proof that people wanted slimmed down low-cost options. While Aereo won’t be the catalyst for unbundling, other technologies such as DVR commercial skipping, Netflix, Hulu, YouTube, streaming video, and piracy will continue to pressure the networks’ business model.
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In fact, we’re already aware of companies working on technology that would effectively replace Aereo and which would be legal. We discuss that in greater length in the “What Happens Tomorrow” section of this report.
This was a complicated case, so we thought it was worthwhile to explain Aereo and the implications of the decision.