Diller: Once Aereo Gets Big We'll Start Investing In Original Content

Tormenting US TV Broadcasters With a Tiny TV Startup

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Aereo has stirred plenty of ire among U.S. TV broadcasters for pulling their over-the-air signals and providing it to subscribers for a fee.

Aereo backer Barry Diller
Aereo backer Barry Diller

But it's about to get worse. Aereo's main backer, IAC chief Barry Diller, said the startup will get into original content once it reaches meaningful scale, around 10 to 15 million households.

Mr. Diller said Aereo is planning to roll out the service to 22 cities in the next six to eight months in addition to New York and Boston. With that many households paying $8 a month, Aereo can start investing in its own content, according to Mr. Diller. "We will have a billing relationship with those homes and can make our own programming," he said during an on-stage interview at All Things D's tech conference in Rancho Palos Verdes, Calif.

In his typically cantankerous fashion, Mr. Diller disputed the notion that Aereo is depriving broadcasters of anything, arguing that they provide their signal over the air for free anyway. But he did say that all the publicity over suing Aereo has been great for the startup, which just started marketing in New York City.

"Every incumbent wants to guard the wall as aggressively as they can," he said. "All this drama that is stirred up is actually good publicity for us."

But regardless of whether Aereo succeeds or fails, Mr. Diller sees the pay-TV model collapsing as video moves from closed pipes to the open Internet. "I don't think closed systems in our world are going to hold," he said. "Of course they are going to be defended with ideas like TV Everywhere that keep the closed money circle going."

Joining Mr. Diller on stage at D11 was CNN chief Jeff Zucker, who had a slightly different view. "Broadcasters are going to continue to want to be paid for their intellectual property," he said. "If you are offering it in a way they are not getting paid, that's the rub."

In a later session, ABC/Disney TV president Anne Sweeney didn't mince words on Aereo: "I think it is wrong, it is illegal, it is opportunistic piracy. It is taking advantage of our content and the creative community and using it for their own gain. That is why we are in court right now."

"Their model is free over-the-air," Mr. Diller retorted. Of the retransmission fees broadcasters are paid for cable and satellite distribution, he said "they are entitled to whatever they can gauge from the closed system operators."

He repeated his view that the cable bundle, where consumers pay one fee for dozens or hundreds of channels they may not watch, should not survive. "I think a la carte is going to be enormously beneficial to people, especially young people who say they don't want to pay for ESPN, I want this other channel. The idea that you pay thousands and thousands of dollars a year for channels you don't watch, that makes no sense."

Separately, Mr. Diller confirmed that he'd like to sell Newsweek to focus on The Daily Beast, as Variety reported Tuesday. Asked why it seemed like a great idea to buy the venerable newsweekly in 2010, Mr. Diller said, "I got seduced into Newsweek."

All Things D co-founder Walt Mossberg asked, "Who could seduce you?"

Said Mr. Diller: "Oh, let me tell you."

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