You May Not Know Aereo, But It Could Change How You Watch Sports

By Carlos Nazario | Jun 24, 2014

The Supreme Court of the United States is expected to rule on American Broadcasting Companies V. Aereo Inc. It is a case that could revolutionize the way people watch broadcasts.

Aereo is a cloud-based service company that captures the free over-the-air signals provided by the Big Four Networks (ABC, NBC, CBS, FOX), then makes those signals available to consumers for a monthly charge. The consumers can watch live programming or record it and store it on their mobile devices or computers.

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So why wouldn’t the Big Four want to give consumers the opportunity to watch their programs on their tablets, smartphones and computers? Well, Aereo does not pay to grab the signals. Cable companies do the same, but they pay the networks, stations and license holders $3 billion in licensing fees. The National Football League and Major League Baseball are two examples of license holders.

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Aereo argues that since it does not offer programming, it is not the same as cable companies. How their service works is that they provide their customers a tiny TV antenna (about the size of a dime) for tuning into TV channels over their specific metropolitan area. The customers receive cloud coverage, allowing them to store up to 20 hours of programming for $8/month or 60 hours for $12/month. They have their own personal, mobile DVR service.

Should the Supreme Court decide in Aereo’s favor, consumers could rush to sign up. Why pay the up to hundreds of dollars a month for cable programming when you can pay $8-$12 a month with Aereo?

Recent polling has shown that consumers are increasingly dissatisfied with their cable companies. Half of Americans would dump their cable service if they had a chance, and Aereo would give them that chance.

Major league sports owners are very interested in what the Supreme Court decides. They get a big piece of the money pie that is handed out. For example, DirecTV agreed to pay the NFL $1 billion a year for four years in 2011 for the right to have the NFL Sunday Ticket for four years. DirecTV then turns around and charges their customers between $240-$330 to purchase that programming.

By cutting those retransmission fees, a major source of revenue is destroyed for broadcasters. It also undercuts another source of revenue, advertisements. By being able to fast-forward through commercials, advertisements would be less valuable.

Aereo is in a life-and-death struggle. Should the company win this week, their success will explode. Should they lose, they will probably go out of business.

More and more, we are becoming a technology-connected society. is Aereo just another step in the metamorphosis of broadcasting? A great deal of us are already watching programming on our mobile devices, computers and tablets. Aereo, by being able to do it cheaper, would drastically increase the number of people who will do so in the future.

What are your thoughts? Would you connect to a service like Aereo to get your sports programming?