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Fox cable threat: Fox threatens to leave network TV

A Fox executive threatened to convert Fox from a network to a pay-TV-only channel if Internet startup Aereo continues to "steal" Fox's signal without paying for rights.

By Ryan NakashimaAssociated Press / April 8, 2013

Rupert Murdoch, chairman of News Corp., talks to investors during the annual general meeting in Adelaide, Australia, October 2004. Today, News Corp. Chief Operating Officer Chase Carey threatened to take Fox from network TV to cable.

Bryan Charlton / AP

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LOS ANGELES

A top executive with Fox's parent company threatened on Monday to convert the network to a pay-TV-only channel if Internet startup Aereo Inc. continues to "steal" Fox's over-the-air signal and sell it to consumers without paying for rights.

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Anyone with an antenna can pick up a TV station's signals for free. But cable and satellite companies typically pay stations and networks for the right to distribute their programming to subscribers. Industrywide, those retransmission fees add up to billions of dollars every year.

Last week, that business was shaken after Aereo won an appeals court ruling saying it doesn't have to pay those fees because it relies on thousands of tiny antennas.

News Corp. Chief Operating Officer Chase Carey said that not being paid by Aereo jeopardizes the economics of broadcast TV, which relies on both retransmission fees and advertising.

"This is not an ideal path we look to pursue, but we can't sit idly by and let an entity steal our signal," Carey said at the annual gathering of broadcasters, called NAB Show, in Las Vegas. "If we can't do a fair deal, we could take the whole network to a subscription model."

If realized, Carey's proposal would amount to a sea change in how Fox does business. Currently, Fox sends its signal to TV station affiliates, including 27 that it owns directly. Those stations relay Fox programming such as "Glee" and "Family Guy" for free over the airwaves in local markets, and add their own local news and other programming. While most people get Fox through a pay TV provider anyway, millions of other Americans rely on the free signal coming over their own antennas.

Carey didn't explain how TV stations would be affected if Fox shut off the signals it sent to broadcasters and went straight to a pay TV model. Later, the company said in a statement that any change would occur "in collaboration with both our content partners and affiliates."

Gordon Smith, president of the National Association of Broadcasters, was interviewing Carey onstage when he made the comments. Smith said he hopes that the courts will eventually rule against Aereo, and force it to get in line with other pay TV operators.

"We think in the end, we'll be on the right side of the law and we will never get to the 'what-if' scenarios," Smith said.

Aereo takes broadcast signals for free from the air with thousands of little antennas, recodes them for Internet use and feeds that to subscribers' computers, tablets and smartphones. Plans start at $8 a month, which is much cheaper than a cable package, though the service is mostly limited to broadcast channels.

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