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Will Aereo change the way we watch TV?

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On Tuesday, the U.S. Supreme Court hears oral arguments in American Broadcasting Companies, Inc. v. Aereo, a case that Aereo itself and many others refer to as a 21st century version of the landmark 1984 Betamax case, which allowed people to record TV shows on their VCR's.

I'm guessing there are many who are only vaguely familiar with Aereo, especially in Los Angeles, where the service isn't available. (In fact, Aereo isn't available at all on the West Coast, perhaps of an unfavorable ninth circuit ruling in California against a simliar service).

So here's a basic primer: Starting at eight dollars a month, Aereo will "rent" you a tiny TV antenna about the size of a dime that enables you to watch and record your favorite shows from traditional broadcast networks on different devices, like your mobile phone or Apple TV. 

Not only do you not have to worry about getting good reception, but you can record shows just like you would on your cable's DVR system. (There's a more detailed explanation here.) 

New York Times media columnist David Carr is among those who think the court's decision will have a big impact on the TV business

Should Aereo win, the $3.3 billion in retransmission fees broadcasters now receive from cable companies will be in doubt, and in response, broadcasters might just stop broadcasting and become cable networks. Right now, broadcast signals reach about 117 million American homes, but cable penetration is so mature that approximately 102 million homes are now wired.

The vast majority of people already get their television, including the broadcast networks, through their cable or satellite service. If Aereo wins, networks could let the antennas go dark and tuck themselves inside the cable and satellite universe, where, like AMC or ESPN, they would then be paid programming fees.

Carr quotes Aereo CEO Chet Kanojia as saying  the Aereo case is "the Sony Betamax of this century,” which is probably the company's strongest argument. Who would argue now that the Betamax decision was wrong — that it destroyed the entertainment industry? 

Aereo has been trying to make itself seem as significant as possible while strangely, some of the biggest players on the other side have been downplaying the threat, at least when speaking to analysts.

During a conference call with analysts earlier this year, CBS Chairman and CEO Les Moonves was asked if the two billion dollars in retransmission fees CBS expects to receive by 2020 would be threatened if the Supreme Court rules in Aereo's favor. "No," said Moonves. "We will hit that number regardless of what happens with Aereo." 

While stressing that CBS wouldn't be "financially handicapped at all" by an Aereo victory at the Supreme Court, Moonves did say that CBS would have to change the way it does business.

We feel fairly confident that we're going to become victorious. You never know what's going to happen. But if something goes the other way, there are so many other alternatives we can form our own Aereo with the other networks. We could go over the top ourselves. We can go directly with cable. There are a number of ways that we could do things. 

A problem for CBS – and Aereo – is that the broadcast networks have fewer must-see programs and events. A still sizable though shrinking number of viewers still tune into the networks, but most of the water cooler shows decamped a long time ago for cable. Many sporting events – The Final Four, college football's new playoff games, and Wimbledon– have moved exclusively to cable, which is also the home to all-Lakers and Dodgers channels.

Virginia Heffernan of Yahoo summed it up well: "Aereo is all the TV you don't want, whenever you want it."

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