Will News Corp. Pursue a Subscription Model? [Updated]

Univision, CBS join Chase Carey in taking aim at Aereo

Chase Carey minced no words when it comes to Aereo. Addressing broadcasters gathered in Las Vegas for the annual National Association of Broadcasters convention, the News Corp. president and CEO said that if broadcasters fail to win their lawsuit against Aereo, News Corp. would pursue a subscription model and abandon its broadcast signal.

"We won't just sit idle and allow our content to be actively stolen," Carey told the NAB audience. "It is clear that the broadcast business needs a dual revenue stream from both ad and subscription to be viable. We simply cannot provide the type of quality sports, news and entertainment content that we do from an ad-supported-only business model. We have no choice but to develop business solutions that ensure we continue to remain in the driver's seat of our own destiny. One option could be converting the Fox broadcast network to a pay channel, which we would do in collaboration with both our content partners and affiliates."

Carey's threat, if carried through, could cripple the network-local station broadcast model. While that might seem an extreme solution, News Corp. isn't the only network to consider a radical solution.

Soon after Carey delivered his bombshell, Univision and CBS threw their support behind Carey. Univision chairman Haim Saban offered this statement. "To serve our community, we need to protect our product and revenue streams and therefore we too are considering all our options, including converting to pay TV," Saban said. "With Hispanics watching over-the-air news and entertainment at twice the rate of non-Hispanics, being forced to convert to cable would significantly impact this community," he added. 

Never one to be shy, Les Moonves told The New York Times, he "wholeheartedly supported what Chase said. The network has already considered taking its local stations off the air in New York, where Aereo has launched, but that's a long shot because broadcasters still think they can prevail in court.

Alleging that Aereo is pirating broadcast content, broadcaster owners have sued Aereo, but so far have had no success in halting the service. Last week, a New York appeals court upheld a lower court decision and refused to grant broadcasters an injunction against the service, which "rents" tiny TV antennas to subscribers in order to stream local TV signals to them over the Internet.

Broadcasters aren't giving up. They can go to trial on the merits early next year, ask for an en banc reconsideration by the full appeals court or pursue a political solution.

Carey seemed to suggest broadcasters would continue with legal courses of action, as well as take their case to lawmakers. "We believe that Aereo is pirating our broadcast signal. We will continue to aggressively pursue our rights in the courts, as well as pursue all relevant political avenues, and we believe we will prevail," he explained.

Responding to Carey, Aereo had equally strong words. "When broadcasters asked Congress for a free license to digitally broadcast on the public's airwaves, they did so with the promise that they would broadcast in the public interest and convenience, and that they would remain free-to-air. Having a television antenna is every American's right," a company spokesperson said. 

Whatever course broadcasters pursue, the legal fight is expected to drag out.

In the meantime, Aereo plans to expand to 22 cities, giving it the opportunity to grow beyond the 3,000 or so subscribers it has in New York.

"A year or two in court, Aereo will expand, so [broadcasters] might not be able to put the genie back in the bottle," said Andrew Goldstein, a copyright attorney with Freeborn & Partners. "It's very likely [broadcasters] will pursue a legislative solution."