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Broadcast Turning to Cable Is a 'Weak Argument': Aereo CEO

Tuesday, 14 May 2013 | 1:17 PM ET
Aereo Offers Online TV, But May Face Legal Fight
Tuesday, 14 May 2013 | 11:40 AM ET
Chet Kanojia, Aereo CEO, discusses his plans to expand into two new cities; and shares his thoughts about the legality of his company's platform which allows users to watch live television online.

Aereo—the start-up that's challenging broadcast television—is giving viewers the choice they want, and broadcast networks are ignoring consumers, the company's CEO and founder told CNBC.

The company is butting heads with broadcasters both in the market and in the courts, but is continuing with its expansion plans, announcing an expansion of services this week to 22 more U.S. cities.

"We're about 15 percent into the expansion activity, hopefully we'll pick up the pace soon," CEO Chet Kanojia said.

Aereo's distribution of television content allows consumers to view, save, fast forward, rewind and pause live broadcast television over the Internet using its antenna/DVR technology, without any cords, cables, boxes or cable provider plan.

Les Moonves, president and CEO of CBS, told CNBC last week that Aereo is "not a serious threat" and "it is an illegal service" that charges consumers for free services. "As they open up into new marketplaces we will challenge that," he said.

(Read More: Moonves Says Content Is Still King, Aereo Not a Threat)

Kanojia responded to these comments on CNBC's "Squawk on the Street" by saying that "consumer choice is always an important thing and I would submit if it's not a serious threat, people should stop caring about it."

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"But people obviously care, and I think for a very important reason: Aereo is the first company that has really created an alternative for consumers out of the closed ecosystem," he said.

"The issue here really is the consumer. The trend is towards choice. The trend is towards consumers picking and choosing what they want and Aereo is a really interesting technology that starts that dialogue," he said.

(Related: Aereo as American as Apple Pie: Media Mogul Diller)

"The idea that you'd say to consumers 'sorry the spectrum we have, we are going to abandon and not allow you that choice' just seems like a very weak argument to me," he said. "I think there would be very significant challenges in going down that road."

Kanojia said that the "sacred cow" in this situation is the bundle, where networks sell multiple channels to cable companies in order to draw a premium price, requiring the purchase of rights for less-demanded channels alongside must-have networks.

(Related: Economics Changing for Cable, Bundling Threatened: John Malone)

"All of these efforts you see are not consumer friendly," Kanojia said. "Consumers aren't stupid. They understand that if you're going to have somebody pay $200 for a monthly fee and you watch seven or eight channels, there is not a value proposition that makes any sense."

"Aereo is the first approach towards moving people away, creating an alternative, giving them a choice," he said. "If you watch less programming, why do you want to pay for 500? So, make a choice."

Kanojia added that he had "no idea what the trajectory will be" for the legal action against his company, but he's focused on expansion and taking challenges as they come.

— By CNBC's Paul Toscano. Follow him on Twitter and get the latest stories from "Squawk on the Street" @ToscanoPaul

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