Barry Diller Defends Aereo, Says Legal Battle is Over

Barry Diller

Chet Kanojia raised $20.5 million in seed investment, including millions from Barry Diller, who said that when he first heard Kanojia pitch Aereo, his team "spent a lot of time and a good amount of money trying to find, legally and technically, what was wrong with it."

The IAC topper says networks and studios' impending petitions for government intervention against the streaming service are also futile: “No incumbent ever wants to see its territory invaded."

Barry Diller said Monday that Aereo's recent legal victories make it clear that networks and studios suing to stop his IAC-owned service are fighting a losing battle.

“We think the lawsuit is over, but what we think is broadcasters are doing is saying this is a terrible threat and [they are trying to] get Congress to act," the IAC chairman and senior executive told a crowd at the Milken Institute's Global Conference in Los Angeles. "I don’t think it will happen, but its up for grabs.”

Diller said it was not his intent to disrupt the cable and broadcast industry. Aereo it just part of the changes in business models being brought about by technology advances.

“The reason it interested me was not that I wanted to go into the newly enabled business of technology with antennas,” said Diller  “We’re just starting on video.. It's just beginning and its going to absolutely change most things. It will break up the closed and bundled system of cable and satellite distribution because I think it has  gotten unwieldy.”

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The resistance has not surprised him. “No incumbent ever wants to see its territory invaded,” said Diller. “That makes them angry if you invade the territory of a closed system.”

Diller is the primary backer of Aereo, which broadcasters and studios see as the latest technological challenge to owners of intellectual property. Aereo takes signals from over the air -- without paying royalties or retransmission consent fees -- and delivers them over the Internet in packages sold to viewers as an less expensive alternative to paying for cable TV.  

Aereo offers consumers a full lineup of broadcast stations. That includes the ability to fast-forward past commercials and record programs on digital recorders for later use.

On April 1, The Second Circuit Court of Appeals declined to issue an injunction against the streaming-TV service Aereo in a legal battle with broadcasters and film studios including Disney’s ABC network and Twentieth Century Fox. Hollywood says Aereo is the same as a cable-television network, so it falls under the 1976 Copyright Act which bans unlicensed communications with “the public,” “by means of any device or process.”

The three-judge panel ruled that by providing individual streams to consumers Aereo was similar to a consumer streaming a TV show from a Slingbox in one room to a TV set in another room. The judges said Aereo has one TV antenna and one recording device for each subscriber, so it is not the same as a cable TV system.

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Aereo is already available in the New York City market and will launch in Boston on May 15. The company has said it will soon expand to about 20 other markets, including Chicago, Philadelphia and Washington, D.C.

When asked about the threat by broadcasters to move their prime programming to cable TV to protect it from Aereo, Diller said “there is literally no chance. I think they are doing it  so enough people will say that would be terrible. Let’s get Congress to change the law.”

"The networks most profitable business are their local stations," he added. "The idea they can rip the primetime programming from the local stations and the stations will survive is kind of silly... These companies -- and I used to be one of them -- have for years resisted any kind of change. What fool wouldn’t resist change if change might take away their neat little situation?"