Broadcasters buy time after Aereo defeat

In ruling against Aereo Wednesday, the U.S. Supreme Court may have just bought broadcasters more time.

With Aereo announcing Saturday morning in a tweet that it would pause operations, questions linger as to what similar — but legal — alternatives will come to consumers who want to divorce their cable companies and still get reliable local TV.

One can always monkey around with rabbit-ear antennas. But broadcasters will be better served if they take the initiative to further develop their streaming options for those without cable, says Richard Doherty, technical director for the Envisioneering Group, a tech consulting firm. "Broadcasters have their mandate, and they're under attack (by upstarts)."

Aereo, which delivered over-the-air channels via online streaming to computers and tablets for about $8 a month, has not been the market buster it was portrayed to be. Available in just 11 cities, it gained business only from a small fraction of cord-cutters. But it captured the imagination of many, who saw the potential for a reality in which consumers can get live local TV through Internet streaming.

For all the hoopla about Duck Dynasty and Fox News, Americans still watch more network TV than just about anything else. And live streaming this popular segment of the giant TV landscape had been — until Aereo — almost non-existent. (Subscribers of cable and satellite service can stream TV anywhere, but they still need the underlying subscription.)

The nation's broadcasters have been given free spectrum to deliver free over-the-air broadcasts and have a responsibility to "make it easier for people to get their stuff," Doherty says. If they don't, "I dare say, people inside the Beltway may decide it for them."

The TV networks have a case of the Innovator's Dilemma here. Push forward with live streaming on their own, and they stand to trigger the ire of cable and satellite distributors that pay dearly to distribute their content. Ignore the savvy cord-cutters who vent on Twitter their frustration at the lack of streaming options, and the networks will increasingly come to look like slumbering giants interested only in retaining revenue streams.

"It's complicated," says Dennis Wharton, spokesman for the National Association of Broadcasters. "It's easy for folks who are unfamiliar with how contractual arrangements of our business model works to say, 'Why don't they just slap it in on the Internet?' We are doing that to the extent that we own the contractual rights of that programming. But streaming 24 hours of broadcast stations — it'd be illegal to do that in many instances."

To be sure, there have been some promising leads and incremental developments. Disney, which owns ABC and ESPN, has a deal with Dish Network that could lead to Disney's content being streamed over the air even for those without cable. ESPN is considering selling live-streaming MLS games to consumers without cable, according to Reuters.

All major networks have apps — on tablets and streaming devices such as Apple TV, Roku and Xbox — that deliver recently aired shows and a limited menu of on-demand content. Their websites offer similar options. Hulu, which is a joint venture of the major broadcasting companies, runs on-demand TV shows for free. About 150 local stations stream non-prime-time shows and their less popular "dot 2" and "dot 3" programs on their websites through a streaming technology by start-up Syncbak. "That broadcasters are resisting innovation is absolutely absurd," Wharton says.

But the very profitable universe of TV distribution — the money exchanged among pay-TV providers, networks and TV station owners — inhibits the incentives to come up with radically transformed forms of TV distribution. Nixing Aereo "is more business as usual rather than a seismic industry change. The retransmission gravy train looks like it chugs on," says Rich Greenfield, analyst for BTIG Research, referring to the fees paid by pay-TV providers to broadcasters.

Meanwhile, tech-savvy cord-cutters will look for a work-around with a patchwork of limited streaming options now available — day-old shows and Bloomberg TV available on Apple TV, mixed with Netflix and free Hulu content, while getting up from the sofa periodically to adjust antennas during bad weather.

Others who can't or won't be bothered to juggle multiple accounts and devices will pay for the comforts of cable. For all its warts, cable is nothing if not reliable.