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Aereo is the New New Thing

Jon Friedmans Media Matrix By Jon Friedman | Jon Friedmans Media Matrix April 15, 2013 at 3:28PM

The saga of rising-star Aereo is so predictable. An entrepreneur, in this case the highly successful Barry Diller, comes up with a brand of technology that catches on with the public. In response, the establishment feels threatened and vulnerable about losing its competitive advantage in the marketplace.
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Barry Diller - Aero

The saga of rising-star Aereo is so predictable. An entrepreneur, in this case the highly successful Barry Diller, comes up with a brand of technology that catches on with the public. In response, the establishment feels threatened and vulnerable about losing its competitive advantage in the marketplace. 

The powers-that-be answer the insurgence by angrily taking the company to court in what comes across as a ham-fisted attempt to slow its new rival's momentum.

Memo to Walt Disney, Comcast, News Corp. and the rest of the television industry, which tried to put the kibosh on Aereo: You can't slow the speed of technological change. The consumers will always flock to the entity that makes their lives easier -- especially when a company gives them their entertainment at a cheaper price.

In case you haven't heard of Aereo, it essentially converts a consumer's phone, tablet or computer into a small television set by employing tiny antennas to get over-the-air signals and then put out personalized live video streams across the Internet. Aereo's website points out: "We made the TV antenna unbelievably small. We connected these antennas to the Internet. We give you control – all without cords, cables or boxes."

Users pay about $8 each month, but -- to the chagrin of the television networks -- Aereo doesn’t pay potentially lucrative retransmission fees to the stations that are making the content available. As The New York Times put it: "Those fees are an increasingly important revenue source for the stations, so it is not surprising their owners have sued to protect them." The networks sought an injunction to halt Aereo's progress and were defeated in court. 

Now Diller intends to take the Aereo service, which had been available only in New York City, to the rest of the country. Look for Diller to expand into nearly two dozen market centers. He is raising the sakes for determining how consumers will wind up obtaining and enjoying their content.

Diller must be greatly enjoying the discomfort of the TV big-shots. Diller, the head of IAC Corp., loves to stick his finger in the eye of the establishment. He did it, for instance, when he launched News Corp.'s Fox network back in 1986, daring to present a fourth offering to the American viewing public. Diller is, above all else, an innovator and he proved it with Fox. He was making a difference and shaking up the industry by having new ideas. 


Of course, this was why the TV world was threatened by him. It is so much easier to stick to the tried and true and not take any chances. Fox made its mark right from the outset as a haven for restless, creative types who felt no kinship with ABC, NBC and CBS..

Before long, such daring programs as Married with Children and The Simpsons had the Big 3 -- NBC, CBS and ABC -- on their heels and scrambling to come up with TV shows of their own that were just as audacious. 

But the copy-cat strategy didn't work too well and Fox was off and running. Back then, it didn't do any good, either, to try to stop Diller's forces. When a Michigan housewife protested the raunchy content of Married With Children, what she mostly accomplished was giving the fledgling show the kind of free publicity that every network craves. The flap even landed on page one of the New York Times. Ka-ching, for Diller.

It's clear that Diller now has gotten under the skin of his counterparts.

“Aereo is stealing our signal,” News Corp president and COO Chase Carey said recently at the National Association of Broadcasters trade show in Las Vegas. “We believe in our legal rights, we’re going to pursue those legal rights fully and completely, and we believe we’ll prevail. But we want to be clear. If we can’t have our rights properly protected through 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.”

If American consumers want Aereo, they will get it. People ALWAYS gravitate to the deal that is best for them. They are more cheap than sentimental. It's a fact. Just ask the good folks at Blockbuster abut this business phenomenon. 

Blockbuster had a great arrangement for a long time. It made it easy for people to get videos of movies and TV shows in one brick and mortar location. All they had to do was get in the car and drive to the mall to get their entertainment content. What could be simpler than that?

Well, Netflix could be simpler. It was suddenly a lot sexier -- read: cheaper -- to get the same DVDs sent to you in the mail for a moderate price. All of a sudden, the idea of getting in the car and schlepping to the Blockbuster store didn't seem so inviting. Blockbuster failed to anticipate the ascent of Netflix until it was too late.

Aereo is here to stay. 

MEDIA MATRIX QUESTION OF THE DAY: Will you become an Aereo customer?

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This article is related to: Aero, Barry Diller, News Corp, QUESTION OF THE DAY