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Aereo May Force Networks to Go Subscription-Based

First, let's explain what Aereo actually does. Founded in February 2012 and based out of New York City, the company provides a subscription-based service that streams over-the-air television signals to Internet-based devices. This is done using thousands of little antennas which pull broadcast signals from the air and pipes it all to a subscriber's device, whether it's a Windows-based laptop, a Mac or an iPad. Even more, subscribers can use the service like a DVR to record content for watching at a later date.

Naturally, a number of networks don't like this idea, saying that Aereo steals their signals. Typically, networks beam their programming to TV stations across the country. Those stations retransmit the content -- in addition to their own local programming like news and whatnot -- over-the-air for free. In turn, cable and satellite TV providers pay to retransmit the station's combined local/national feed to subscribers. On an industry-wide scale, those retransmission fees add up to billions of dollars every year.

However, networks aren't paid for over-the-air transmissions, and that's the big issue with Aereo. The company reportedly isn't paying content owners anything for re-distributing the over-the-air transmissions across the Internet. Because of this revenue loss, a number of networks thus took Aereo to court in hopes of shutting the company down, citing theft and copyright infringement.

"Aereo is stealing our signal," said Chase Carey, Chief Operating Officer of News Corp. "We believe in our legal rights. We’re going to pursue those legal rights fully and completely, and we believe we’ll prevail. But we want to be clear. If we can’t have our rights properly protected through legal and political avenues, we will pursue business solutions. One such business solution would be to take the network and turn it into a subscription service."

The Second U.S. Circuit Court of Appeals in New York said this week that Aereo could continue its operations because it depended on technology that any consumer can install -- an antenna and a video recorder -- in their own home. Aereo is not even a video-on-demand service, but is merely a company that leases to each user an individual remote antenna and space for storing saved video. The Court even said Aereo's streams are not "public performances," so they do not fall within the copyright infringement realm.

However, Gordon Smith, president of the National Association of Broadcasters, is hoping that a different ruling at the Ninth Circuit will prompt the U.S. Supreme Court to get involved. Meanwhile, this week during the NAB Show in Las Vegas, Carey said that he's not going to sit idly by and let an entity steal his broadcast TV signal, even if it means throwing FOX behind a paywall.

"If we can't do a fair deal, we could take the whole network to a subscription model," he warned. Later, the company stated that any change would occur "in collaboration with both our content partners and affiliates."

Currently, Aereo is only available in New York City, but the company plans to expand into 22 additional cities in the near future including Atlanta, Boston, Chicago, Dallas, Kansas City, Salt Lake City, Tampa and others. The company offers over 30 over-the-air broadcast channels including major players like NBC, ABC, CBS, FOX, CW and PBS. Plans range from a 24-hour pass for $1 to an annual subscription for $80.

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