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Barry Diller Defends Aereo

Wednesday, 14 Mar 2012 | 5:12 PM ET

Controversial Internet TV service Aereo launches in Beta in New York City today. Lawsuits from all the major broadcasters, trying to stop the service, hasn’t halted Aereo’s plan to roll out one market at a time, changing the way people watch TV. Aereo filed a countersuitagainst the networks Monday.

Barry Diller
Barry Diller

Barry Diller, chairman of IAC which led a $20.5 million financing round in Aereo, told me in a rare interview that he expects to win.

Here’s how Aereo works.

For $12 a month Aereo sells Internet access to the broadcast networks and over 20 local channels, plus the ability to save and watch shows later. Aereo circumvents cable or satellite TV providers and retransmission fees by having one antenna for each subscriber, which it will store in data centers.

Diller tells me that he had IAC’s lawyers do extensive due diligence on Aereo and he couldn’t find any reason not to invest. He says he’s not surprised that the media giants are suing—he expects them to try to defend their territory – but he’s confident that the case will be settled quickly, and Aereo will win.

Diller tells me he doesn’t expect Aereo to be a major threat to the cable companies – people will want access to ESPN—but he acknowledges that it could inspire cord cutting. Aereo’s real niche, Diller says, might be the younger generation that has grown up accessing content on the Internet.

Questions? Comments? MediaMoney@cnbc.com

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  • Working from Los Angeles, Boorstin is CNBC's media and entertainment reporter and editor of CNBC.com's Media Money section.