The Battle over Retransmission Rights

Aereo has certainly stirred up the hornets’ nest in the ongoing battle over broadcast retransmission consent in the entertainment industry. If you’re not familiar with retransmission consent and the controversy over Aereo’s new service, hold onto your entertainment industry hat. You’re in for a wild ride.

What is Retransmission Consent?

In the infancy of broadcast television, there were vast numbers or remote areas that standard over-the-air transmission didn’t reach. Small “retransmission” companies started popping up to grab the big network transmissions, boost the signals, and retransmit the signals to remote or rural locations. The broadcaster loved this because it extended their reach which increased their advertising revenue (their only source of income at the time). Effectively, this was the birth of cable companies, companies that charged money to provide the same programming you could get for free if only you could pick up the over-the-air signal.

Broadcasters versus Cable Companies

Fast forward to the Cable Television Consumer Protection and Competition Act (aka the 1992 Cable Act) which was a mish-mash of incentives and regulations for the broadcast and cable industries. Various lobby groups and special interests got provisions tucked into the law which was originally intended to promote more competition and give consumers more access to programming. One key provision is that broadcasters could demand a fee in exchange for consent to rebroadcast their content. In effect, the provision forced cable companies to pay whatever the broadcaster wanted in order to carry their programming. And broadcasters took full advantage of the new low creating a new revenue stream that is expected to grow from $2.36 billion on 2012 to $6.05 billion by 2018[1].

The Debates

Obviously, cable companies are not happy having big network programming held for ransom. Broadcasters have resorted to near-extortion tactics from blacking out cable companies from network channels unless the ever-increase consent fees are paid to pulling unrelated channels as a form of leverage. (e.g. pulling Fox Sports from a lineup because a cable company didn’t opt to pay for Fox News consent).  Cable companies argue that the intent of the 1992 Act to give consumers more options has done just the opposite as satellite television subscribers lose local programming to fee negotiations. The broadcasters like CBS, NBC, ABC, etc, on the other hand are creating the content and argue they have a right to make money from those retransmitting that copyrighted content in what equates to a “public performance”. And so the battle wages on.


Enter Aereo

New technology often disrupts the status quo. That is certainly the case with Aereo. In a clever workaround to current copyright and retransmission laws, Aereo leases an HD antenna it developed to each of its subscribers. That’s key; each subscriber gets their own dime-sized antenna housed in a NYC datacenter. The antenna picks up the free over-the-air broadcast signal and delivers it through the internet to your internet-enabled TV, computer, or mobile device. As a subscriber, you pay around $8-12 per month for programming you can access anywhere in your normal broadcast area (compared to $25+ for local programming packages from the cable company). The datacenter also has servers that record your programming like a hosted DVR so you can watch recorded programming without new hardware in your home.


The New Battle

Aereo has already been sued by the big networks. They pay no retransmission consent fees and claim they don’t have to. So far, the courts agree with them. Any consumer can go buy an HD antenna at Wal-Mart and watch broadcast television for free as long as they are not showing it in a “public performance” which would violate copyright law. Because Aereo leases a separate antenna to each subscriber, the courts have upheld their right to do so by denying injunctions against Aereo under the same logic. The big networks with their fat broadcasting jobs are nervous this new approach will cut off the retransmission consent revenue streams. The next step may be a Supreme Court battle over interpretation of the 1992 Cable Act in this circumstance, but so far, Aereo has beaten back the networks in every court clash.


Where Is All This Headed?

It is clear that innovation is here to stay. If Aereo doesn’t’ continue its streak of defending its right to stay in business, another innovative entrepreneur will undoubtedly invent a new technology that will push the industry out of its comfort zone. But for the job seeker, this simply means that internet jobs, operations jobs, and other entertainment industry jobs will likely grow in the areas of innovation. So as you finish reading this article, take a minute to browse technology job in entertainment on Who knows, you might just find the “next big thing” is ready for you.


[1] SNL Kagan

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