News Corp. COO Chase Carey tells an NAB Show audience that, while it will continue with legal action to stop Aereo and other streaming services from distributing its broadcast signals without permission or compensation, it's prepared to take its broadcast network off the air and convert it into a pay channel, "which we would do in collaboration with both our content partners and affiliates.”
Fox: If Aereo Wins, Net Could Go Cable
With the Aereo court decision still fresh, News Corp. President & COO Chase Carey says Fox would consider becoming a subscription-based network if broadcasters are not able to stop streaming services from retransmitting content without compensation.
“We won’t just sit idle and let people steal our signal,” Carey said during a Q&A at the National Association of Broadcasters Show in Las Vegas.
Being fairly compensated for content was a core theme of Carey’s remarks, who also said that “dual revenue streams” — meaning both ad sales and retransmission fees — is essential to broadcasting’s future.
Carey said in negotiating for retransmission fees, broadcasters are simply following the process under which cable channels have operated for decades except “what we receive for content is undervalued, especially when compared to cable.”
There is no compelling need for Washington to be involved in what should be “just private party negotiations,” Carey added. “We have the best programming and we need to be fairly compensated for it. It’s the way business is done.”
Carey said Fox’s return to the NAB Show in 2010 after a decade-long absence was indicative of a renewed commitment to having fruitful relationships with its own affiliates following their own contentious negotiations over retrans fees.
“We came back to NAB to be part of the solution and to be working with broadcasters,” he said.
Carey called affiliate relationships “the core of our business” and said they will prevail “as long as we approach it with a sense of fairness and both realize our most exciting future is to work together and find solutions. A partnership is not healthy unless everyone is benefiting.”
Carey’s remarks came a week after a federal appeals court rejected broadcasters’ request to stop the Internet service Aereo from streaming their content without paying for it.
Broadcasters had argued that Aereo’s business of taking over-the-air signals for free and streaming them over the Internet to users who pay $12 a month infringed network copyrights. Aereo, which is currently only available in New York City, plans on breaking into 21 other cities later this year.
The court ruled that the TV networks suing Aereo failed to demonstrate “that they are likely to prevail on the merits of this claim in their copyright infringement action.”
Carey said the Aereo case is part of the larger problem of “piracy overall.”
“The broadcast business has to be one that allows us to be fairly compensated by those who want to distribute our product,” Carey said. “We need to be fairly compensated for our content.”
Broadcast reaction to Carey’s pronouncement was summed up by NAB President Gordon Smith: “He is trying to send a signal that we either win in the court or we will win in the marketplace.”
Noting that there have been conflicting appeal court rulings in broadcast streaming cases, Smith said the Supreme Court will eventually have to step in and it will find that “American copyright law applies to broadcasters. You can’t take somebody’s content, sell it to someone else and keep the money.”
Smith said broadcasters could try to block Aereo with legislation, but that it wouldn’t be easy.
“Having been a lawmaker, I can tell you the congressional remedy is long in coming and difficult, with a lot of cross-currents. The other side of that is that any member of Congress has to be concerned if broadcasters are put in a situation where they have to go to a subscription service.”
Asked if Carey’s move could have negative consequences in the battle over spectrum since he is saying Fox is ready to abandon its broadcast service, Smith said, “People will interpret it as they will. But he has certainly laid down a marker for a simple principle: We can’t produce great content for free.”
According to a Fox spokesperson, key Fox affiliates and affiliate board members were told in advance of Carey’s remarks.
“This was done in part to get the attention of Congress,” said one broadcast industry source who added that if Aereo and the like are allowed to proceed, service to the 54 million Americans who still rely on over-the-air television could be disrupted.
Aereo’s Virginia Lam made this statement on Carey’s announcement: “Aereo has invented a simple, convenient way for consumers to utilize an antenna to access free-to-air broadcast television, bringing television access into the modern era for millions of consumers. It’s disappointing to hear that Fox believes that consumers should not be permitted to use an antenna to access free-to-air broadcast television. 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.”
News Corp. released a statement from Carey following his speech. Here it is in its entirety:
“News Corp. has a long-standing commitment to the broadcast television business, and to delivering the highest-quality entertainment, sports and news programming to our viewers on a localized basis. We are committed to broadcasting under a business model where programmers receive fair compensation from parties that want to redistribute our product while continuing to make our product available for free to individual consumers that want to access our signal.
“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.
“That said, we won’t just sit idle and allow our content to be actively stolen. 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.”