Aereo Inc. Chief Executive Officer Chet Kanojia challenged CBS Corp. and News Corp.’s Fox broadcast network to follow through on threats to go off the air and switch to cable in protest over the Internet startup retransmitting their shows without permission.
Lower advertising revenue from cable and pressure from lawmakers will make it difficult to put the switch into practice, Kanojia said.
CBS and News Corp. have threatened to take their broadcast signals off the air if Aereo, backed by billionaire Barry Diller, is allowed to continue reselling network programming over the Internet without paying a retransmission fee. The two networks would be sacrificing billions of dollars in ad revenue by making the switch, Kanojia said.
“The reality is, they want to get paid twice, and Aereo is just an excuse to articulate that business strategy,” Kanojia said. “Good luck to them.”
Broadcast and cable networks get paid by advertisers and pay-TV operators, such as DirecTV and Time Warner Cable Inc., that pay for the right to carry their programming.
While broadcast advertising trumps cable advertising because the audiences are much bigger, CBS and Fox say they must be compensated for their programming. Leslie Moonves, CEO of CBS, said the CBS television network could go off the air if courts don’t stop Aereo.
His comments follow those of News Corp. Chief Operating Officer Chase Carey, who said last month that Fox and its affiliate stations would stop broadcasting and serve only pay-TV customers to protect the billions of dollars spent annually on programs.
CBS generated $4.17 billion in advertising revenue last year, about four times more than popular cable networks such as Time Warner Inc.’s TNT or Comcast Corp.’s USA, according to estimates from research firm SNL Kagan. Fox generated about $2.58 billion in advertising sales.