End of free TV as you know it may be on the horizon

A skirmish in New York City between a streaming live broadcast service and the major TV networks could speed up the death of free TV as consumers know it.

In recent days, Fox, CBS and Univision declared that they’ll stop over-the-air broadcasts of their programming if a streaming live-broadcast-to-Internet service called Aereo isn’t stopped in its tracks.

A number of broadcasters have filed a lawsuit to shut Aereo down, but pre-trial moves to prevent the service, which is backed by entertainment heavyweight Barry Diller, have been rebuffed by federal courts in New York.

Background

At stake in the case are billions of dollars in revenue for the networks. As much as 10 percent of their annual revenues come from retransmission fees—fees they charge TV stations and cable providers for rebroadcasting network programming.

Aereo doesn’t pay any retransmission fees. If other outlets, such as cable companies, followed suit, industry revenues would take a shellacking.

But Aereo may be pushing the broadcasters in a direction they were already headed.

“One way or another, valuable content is going to want to migrate from free to behind a pay wall,” Joel Espelien, a senior analyst with the Dallas-based The Diffusion Group (TDG) told PCWorld.

“Aereo is serving as a catalyst for that discussion, but those basic dynamics were in the industry with or without, Aereo,” he added.

Without Aereo, he continued, the migration of free over-the-air broadcast content—such as the NCAA March Madness basketball tournament and NFL games—behind a pay wall may have taken longer, but it’s still going to take place.

“If a disruptive service like Aereo takes off, then these things will happen faster,” he added.

What may happen

In the future, the networks may still have some free over-the-air content—for no other reason than to justify their FCC licenses—but that content will be a pale shadow of what’s offered today.

“It’ll be this TV-lite content, while all of the good stuff will behind some kind of pay wall,” Espelien noted.

That pay wall will protect the networks’ revenue streams, he said, "and they’ll offer just enough free content to overcome the political and public objections."

The FCC told PCWorld that it’s not commenting on networks’ pledges to stop over-the-air broadcasts in New York.

A shining example of what most network programming will be like in the future was NBC’s coverage of the Olympics last year.

“If you didn’t have a paid TV subscription, your online access to the Olympics from NBC was terrible,” Espelien said.

“That’s the perfect preview of what television will be like,” he added.

It could be some time, however, before it’s determined if Aereo will be an accelerant for the brave new world of pay-wall TV. That’s because while New York’s courts thinks the technology behind the service is copacetic, California’s doesn’t.

Those kinds of legal conflicts usually have to be settled by the U.S. Supreme Court, a process that could years to resolve.

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