Two disruptive tech start-ups rattle US broadcast giants | business | Hindustan Times
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Two disruptive tech start-ups rattle US broadcast giants

business Updated: Apr 09, 2013 21:22 IST
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Two fledgling technologies could dramatically reshape the $60 billion-a-year US television broadcast industry as they challenge the business model that has helped keep broadcasters on the lucrative end of the media spectrum.

On April 1, a US appeals court rejected a petition by the major broadcasters including Comcast's NBC, News Corp's FOX, Disney's ABC and CBS, to stop a service called Aereo, which offers a cut-rate TV subscription for consumers by capturing broadcast signals over thousands of antennas at one time.

It was the second time in recent months that TV broadcasters failed to block a new technology that undercuts revenue they generate for their television shows.

In November, a California court struck down Fox's request to ban Dish Network's ad-eliminating video recording device called the Hopper.

The two services strike at the heart of the TV broadcast model, whose future will be up for debate at the National Association of Broadcasters show, which 90,000 people were expected to attend in Las Vegas this week.

The most touted feature of the Hopper makes TV commercials disappear completely when watching recorded prime-time broadcast television, unlike prior DVRs and other devices that require the viewer to fast forward through ads.

Aereo could cut the numbers of people who need or want a more expensive cable video subscription, which would eat into the $3 billion in so-called "retransmission fees" broadcasters get from cable and satellite systems, based on the number of their subscribers.

The threat so far is limited. The number of people using Aereo - backed by media heavyweight Barry Diller, who launched the Fox network in 1986 - is miniscule compared to the number of US pay TV customers.

Dish's Hopper is a more mainstream device that Dish's 14 million subscribers have access to.

But broadcasters fear the services will continue to expand, cutting into their viewing audience and advertising revenue.

Though courts have made preliminary decisions in favour of Dish and Aereo, both cases are in the early stages and those decisions might be reversed.