DirecTV, Time Warner Cable Said to Consider Aereo-Type Services

October 27, 2013 Leave a comment

DirecTV, Time Warner Cable Said to Consider Aereo-Type Services

DirecTV (DTV), Time Warner Cable (TWC) Inc. and Charter Communications Inc. (CHTR), taking a page from Aereo Inc., are considering capturing free broadcast signals from TV networks to avoid paying billions of dollars in so-called retransmission fees, said people with knowledge of the deliberations. Aereo, which charges $8 a month for online access to broadcast TV, is locked in a court battle with CBS Corp. (CBS) and other media companies over the legality of its service. If Aereo prevails, cable companies could use the same approach to bypass the retransmission fees they currently pay for network signals, said the people, who asked not to be identified because the discussions are at an early stage. Time Warner Cable has even considered buying Aereo, said one of the people.Broadcast TV companies petitioned the U.S. Supreme Court this month to rule that Aereo is an illegal operation. The startup, backed by billionaire Barry Diller, uses thousands of small antennas to capture free over-the-air signals and transmits the programming to paying subscribers over the Internet — without the permission of broadcasters.

“If found to be legal, the Aereo concept is very interesting, especially as it relates to retransmission consent fees,” said Maureen Huff, a spokeswoman for New York-based Time Warner Cable. She declined to comment on whether the cable company would consider buying Aereo.

Justin Venech, a spokesman for Stamford, Connecticut-based Charter, declined to comment, as did Aereo’s Virginia Lam. Darris Gringeri, a spokesman for El Segundo, California-based DirecTV, didn’t immediately return messages seeking comment.

Legal Showdown

Aereo’s legal fight pits the New York startup against some of the world’s largest media companies, including Walt Disney Co., 21st Century Fox Inc. and Comcast Corp. (CMCSA)’s NBCUniversal. The broadcasters are trying to preserve their ability to charge retransmission fees, which let pay-TV companies air CBS, ABC, NBC and Fox on their systems.

Retransmission fees in the U.S. are expected to double to $6.1 billion in 2018 from $3.01 billion this year, according to research firm SNL Kagan.

The fees are essential to the broadcast TV industry, Fox President and Chief Operating Officer Chase Carey said in April. If Aereo is permitted to stay in business, Fox’s broadcast network will convert into a cable channel and cease to provide over-the-air access, he said at the time.

Shares of Time Warner Cable, the second-biggest U.S. cable system, were little changed today in New York, closing at $119.44. Charter rose 0.4 percent to $138.58. DirecTV, the biggest U.S. satellite-TV system, fell 0.3 percent to $62.81.

To contact the reporters on this story: Andy Fixmer in Los Angeles at afixmer@bloomberg.net; Alex Sherman in New York at asherman6@bloomberg.net; Jonathan Erlichman in New York at jerlichman1@bloomberg.net

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Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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