Television broadcasters are considering whether to ask for help from lawmakers in their bid to shut down Internet video service Aereo.
Aereo uses tiny antennas to pick up free over-the-air broadcast television signals and then transmits the video to its customers over the Internet. Customers pay a monthly fee to rent access to an antenna, which allows them to record and watch network television on their mobile devices and computers. Coupled with other online video services like Netflix and Amazon Prime, Aereo could encourage more customers to drop their expensive cable packages.
Aereo is currently only available in New York City, but the company has plans to expand to 22 additional cities in the coming weeks.
The TV stations argue that Aereo must pay for permission to rebroadcast their signals, just like cable and satellite providers already do. If Aereo succeeds, the broadcasters worry that Dish or other TV providers may also look to carry their channels for free.
"We need a dual-revenue stream," the broadcasting official said. "We can't afford to put quality content on the air with [only advertising revenue]."
Fox, ABC, NBC and CBS have all filed suit, claiming that Aereo is stealing their copyrighted content. Two federal courts have rejected initial requests to shut down Aereo, although the underlying lawsuit is still moving forward.
Those legal setbacks prompted News Corp. President Chase Carey to make a startling threat this week. Speaking at a broadcast industry conference, Carey warned that Fox would consider taking its stations off the air to prevent Aereo from "stealing" the company's content.
"If we can’t have our rights properly protected through legal and political avenues, we will pursue business solutions," Carey said. "One such business solution would be to take the network and turn it into a subscription service."
Following Carey's comments, executives at CBS and Univision also suggested they could become pay TV channels if the courts or lawmakers don't kill Aereo.
How the companies would follow through on their threats remains unclear. The networks could move primetime shows, sports programming and other content to cable channels, allowing their affiliates to continue airing local news and reruns. Or they could sell off their airwave licenses and get out of the broadcasting business altogether. Either option would be a dramatic response to the online start-up.
Carey said that pulling Fox stations off the air is "not a path we’d love to pursue," but he insisted the company is "not going to sit idly by and let people steal our content.”
Virginia Lam, an Aereo spokeswoman, said it is "disappointing to hear that Fox believes that consumers should not be permitted to use an antenna to access free-to-air broadcast television."
Aereo is also paying attention to the importance of Washington policymakers. The company's chief executive, Chet Kanojia, was in Washington this week to meet with lawmakers and their aides.
Asked about the Aereo battle, Senate Commerce Committee Chairman Jay Rockefeller (D-W.Va.) and Rep. Henry Waxman (D-Calif.), the ranking member of the House and Energy and Commerce Committee, said this week that they are watching the issue carefully, but declined to weigh in on either side.
Rockefeller expressed doubt about the seriousness of the networks' threat to go off the air.
"Companies play games with each other—sometimes seriously, sometimes not seriously," the powerful Democrat told reporters in the Capitol.
Dennis Wharton, a spokesman for the National Association of Broadcasters, said his industry is focused on winning its court battle with Aereo.
"We have not reached out to Congress because we think at the end of the day we are going to win this case in court," Wharton said, noting that a different appeals court ruled in favor of the broadcasters in a separate lawsuit involving a copycat service called "Aereokiller."
If the appeals courts reach different conclusions in the cases, the Supreme Court may step in to resolve the dispute, a process that could take years.
Wharton said his organization has not ruled out lobbying Congress on the issue, saying Aereo is a "threat to the entire model of free and local broadcasting."
The TV networks could ask Congress to amend copyright law to clarify that Aereo's business is illegal. They could also add an amendment targeting the company to a satellite television reauthorization bill that Congress is expected to take up in the coming months.
John Bergmayer, an attorney for consumer advocacy group Public Knowledge, argued that amending copyright law to shutter Aereo could have other negative consequences. He warned that legislation targeting Aereo could also ban some video-streaming services and file-storage sites that are currently legal.
"I don't think there's anything wrong with getting free access to over-the-air broadcast television," he said.
Bergmayer predicted that the broadcasters' threats to go off the air could actually hurt their efforts to maximize their revenue from the FCC's planned auction of some broadcast airwave licenses to cellphone carriers.
"I very much expect their opponents — the wireless carriers — to pick up this loose talk and use it against them," Bergmayer said.