Diller Makes Headlines with Aereo

Media Mogul Barry Diller is making headlines with his investment in Aereo, a new media company that will provide remote DVR storage and streaming of broadcast content. Aereo announced that it has raised $20.5 million in Series A funding led by Diller’s IAC. Diller also has a board seat.

Aereo plans to provide up to 40 hours of DVR space for $12 per month with the content being streamed to internet enabled devices (smart phones, tablets, web enabled TVs, etc.). For starters, Aereo in intends to offer the service to consumers in the New York City DMA starting in mid March. Initial reports of the technology are that it involves an array of tiny antennas, each dedicated to a single customer, feeding the hard drive (DVR) storage. It seems that the company is taking this tact in order to make the claim that they are an antenna rental service and not a multichannel service provider. In doing so, Aereo hopes to avoid the need to negotiate and pay retransmission consent fees and capture the “cord cutting” segment of the market with a product that would complement a consumer’s ability to receive cable programming via the likes of Netflix and Hulu+.

In the mean time, cable operators are reacting to declining subscriber numbers by starting to test and deploy lower cost packages that that have been stripped of expensive sports programming. Broadcasters are still talking about mobile digital broadcast services without much to show for it in the market. Both the cable ops and the broadcasters continue to arm wrestle over retransmission consent fees with the FCC almost a year into the process of a proposed notice of rulemaking on retransmission consent – but that’s another blog entry.

For now the initial news is out about Aereo’s plans have been announced. It is more than likely that New York area broadcasters are huddling with their attorneys this morning on the news to explore their options. One just has to wonder if the next headline will be “Broadcasters Attempt to Shoot Down Aereo with Cease and Desist Orders”.