Barry Diller, chairman of IAC

Aereo TV: Barely Legal By Design

IAC owns Match.com, Vimeo, and The Daily Beast, which it merged with Newsweek in 2010

IAC backs Aereo TV -Watch OTA TV on Computer, iOS device, or Set-top Box

Created the FOX NetworkBrought Home Shopping to Television

As Head of Paramount PicturesInvented the “Made for TV Movie”

Internet access became widespread

Networks realize that the internet could be a source of revenue and began to stream their content on

commercial-supported format at HULU

Creation of YouTube User - Generated Content and Television Programs

Peer-to-peer software - Napster and Kazaa sharing of video programs as well as music

New Digital Formats like MPEG and WMV

Increasing processing power and graphics capabilities

Mid-1990’s

1999

2005

2008

HULU and YouTube use an embeddable video player based on the Adobe Flash plugin API

Microsoft, Adobe and Apple all developed HTTP streaming formats Apple’s HTTP Live Streaming (HLS)

considered the favorite

Browser plugin a relic of the early web push for single HTML5 standard

Netflix uses Microsoft’s Silverlight browser plugin

“It’s as if the mirror cracked and you can see these changes are starting to happen all over the place,”

Mr. Diller said. “Programming over the Internet is going to happen, and cable is only now waking up to the fact that everybody hates them. I think we’re

on the side of the angels.”

“In my heart of hearts, I belive that when businesses are created or preserved with analogue mentalities,

they’re artificially constrained and ripe to be recast in a different way.” said Kanojia.

“Why can’t there be a simple way to pay for this? It’s just irrational that it should cost hundreds of dollars a month. It’s an abusive system set up in an artificial

way.”

CEO Chet Kanojia

“No incumbent ever wants to see its territory invaded,” Diller said of the lawsuits against Aereo.

He added: “I am very fond of Les Moonves, and he is a terrific executive. Les said to me: ‘Look, I have no objec-

tion to what you’re doing. Just pay me retransmission fees and you can go in good health.’ I said, ‘When you can get Radio Shack’ ” — which sells antennas — “ ‘to

pay you retransmission fees, I’ll be right behind them.’ ”

Les Moonves of CBS

Aereo’s technology was designed to take advantage of a landmark 2008 ruling holding that a “remote”

DVR product offered by Cablevision was consistent with copyright law

Because each copy was viewed by only one household, the court ruled that Cablevision was not engaged in a

“public performance” of copyrighted works

Aereo assigns each user an antenna exclusively for his own use. And so, like Cablevision, when 1000 users record

the same program, Aereo creates 1,000 redundant copies

In Aereo’s server rooms are row after row of tiny antennas mounted on circuit boards

Simple copper antenna that, rather than pick-ing up the entire TV spectrum picks up only the

6 megahertz block of spectrum that a viewer wants to see at a given time

Antennas are “multitenant”, when one Aereo subscriber is not using an antenna at a given time, it is available to

all other subscribers

“switched antenna” that’s beautiful in its simplicity. Aereo’s 1.5 inch antenna changes its electrical and

magnetic characteristics in order to replicate the tasks of a standard 35 inch UFH or three foot VHF antenna

To make the service economically viable, Aereo is also capitalizing on major advances in transcoding

technology and cloud storage

Not just in raw storage capacity but better spindle speeds on hard drives improve transmission times

Commercial transcoding costs per stream would have been $8,000 per customer two years ago but now the

company can do it for under $20. A terabyte of storage, which once cost over $1 million, can now be had for

under $100

Translate the over-the-air TV signals into Airplay video streams and let people store hours of television on re-

mote servers

Aereo contends that each of its antennas functions separately to receive the incoming broadcast signals

Broadcasters argued that Aereo’s antennas function collectively as a single antenna, aided by a shared

metallic substructure

So far the courts have sided with Barry Diller and Aereo

Most are under 30 and many have never had traditional subscription cable or satellite TV as

adults

Devices Aereo supports, the iPad, iPhone, and iPod No Android phones as yet, but all the major browsers

on both Mac and PC

Aereo users largely rely on Internet-only and streaming services for content

Sources:

Downes, Larry. “Aereo TV: Barely Legal By Design” Harvard Business Review March 7, 2013

Stewart, Christopher. “High Noon for Diller’s Aereo”. Wall Street Journal 24 May 2012

Fung, Amanda. “Tech startup wheels into ex-tire plant”. Crains New York 10 April 2012.

Gorman, Michael “Aereo puts TV antennas in the cloud, streams OTA broadcasts on the internet” Engadget Feb 14th, 2012

Crook, Jordan “Aereo Looks To TV Providers, ISPs To Accelerate Growth” TechCrunch 4/1/2013

Louis, Tristan “Aereo: The future of TV is here today” Forbes 4/13/2013