Mike Segar/Reuters/File
David Hill, senior executive vice president for News Corp, speaks during a presentation to announce Fox's new sports network in New York last month. The Fox Network is considering moving from over-the-air to cable and satellite distribution to fend off Internet startup Aereo, which it says is reselling the Fox signal without paying for the rights.

Fox affiliates OK with plan to thwart Aereo

If Internet startup Aereo keeps reselling Fox's TV signal without paying for it, Fox could switch from free to pay TV on cable and satellite. Fox exec says its affiliates are 'on board' with its Aereo-avoidance plan. 

Television stations that relay Fox programming are "on board" with a threat to transition the over-the-air network to cable and satellite TV if Internet startup Aereo keeps reselling Fox's signal without paying for rights, the chairman of a Fox group said Tuesday.

Fox's parent company, News Corp., owns just 27 of the 205 stations that carry Fox shows such as "American Idol" and "Glee." The rest are affiliates that are independently owned or are part of chains of station owners. Steve Pruett, the chairman of the Fox affiliate board of governors, spoke about the stations' support in an interview with The Associated Press on Tuesday at the annual gathering of broadcasters, the NAB Show.

Chase Carey, the chief operating officer of News Corp., raised the threat Monday amid a legal battle with Aereo. Carey said that if courts can't stop Aereo from taking its signals for free and reselling them to customers, the company would have to make Fox a subscription-only network.

Haim Saban, chairman of the Spanish-language Univision network, echoed Carey's sentiment.

"To serve our community, we need to protect our product and revenue streams, and therefore we too are considering all of our options — including converting to pay TV," Saban said in a statement.

Pruett said that Fox TV stations could send out two signals — one to cable and satellite providers and another out over the free airwaves. Premium Fox programs could be reserved for paying customers, while the free-to-air broadcasts could be of lesser quality. Pruett said it was too early to go into details.

"We are completely on board with Chase's statement," Pruett said. "We are joined at the hip, so to speak."

There wasn't an entirely united front.

Bill Reyner, chief executive of Mission TV, which operates two Fox affiliate TV stations in Rapid City, S.D., said that while he understands Carey's position and believes Aereo is infringing on Fox's copyrights, he regretted that customers could be caught in the middle.

"The real loser in all of this are those that can't afford pay TV," Reyner said. "Everyone forgets that over-the-air television is free and it serves a very important function. If you go to a cable model, then all those people get disenfranchised and that would be very sad."

National Assocation of Broadcasters President Gordon Smith said he believed the threat would not be acted upon, partly because the federal government regulates the public airwaves and free TV broadcasts are integral to that.

"I think that was a marker that was laid down. I don't think it will ever come to pass," he said. "I don't think Congress would ever get to a place where it'd be that callous that television would have to be paid for."

Currently, 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. And about 85 percent of TV households get their broadcast signals this way. Industrywide, retransmission fees paid by distributors added up to $3 billion last year and are expected to double by 2018, according to research firm SNL Kagan.

Last week, that fee business was shaken after the 2nd U.S. Circuit Court of Appeals in New York issued a preliminary ruling siding with Aereo, which contends that it doesn't have to pay the fees because it relies on thousands of tiny antennas personalized to each customer. It argues its service, starting at $8 a month, is similar to individuals using their own antennas and digital video recorders.

In a separate case, broadcasters are suing a different Internet company called Aereokiller LLC. It also takes broadcast signals using mini antennas and transmits them to paying customers. That case is now before the 9th U.S. Circuit Court of Appeals in San Francisco. Broadcasters hope that a different ruling there will result in the U.S. Supreme Court taking over the matter.

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