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Aereo CEO Talks Legal Victory, Why Broadcasters May Benefit

This weekAereo won a victory — afederaljudge ruledin favor of the startup, refusing to block the controversial antenna-based subscription service that takes free over-the-air TV broadcasts and streams them to any Internet-enabled device.

Frank and Helena | Getty Images

Aereo, which is backed by Barry Diller’s IAC and a number of venture capitalists, won this battle, but this is going to be a long war. The broadcast networks that sued the company — ABC , Fox , CBS , and NBC — aren’t backing down. They’re committed to blocking the broadcasting of their channels over the web without paying retransmission fees.

I spoke to Aereo CEO Chet Kanojia about what this victory means for his business. Bottom line: Now Aereo has the green light to roll out the technology beyond New York City, the only area where it’s now available.

He wouldn’t commit to a timeline or discuss which market would get the technology first. But Kanojia did say that the pending lawsuits would not impact his plans to roll out the business.

Kanojia insists that he’s not trying to convince consumers to cut the cord, he’s simply going after a demographic that’s not interested in paying big cable bills for a huge variety of content. Whether he’s targeting recently college grads who haven’t ever paid for cable or satellite TV or whether he’s luring frustrated consumers to ditch their hefty cable bill may be splitting hairs.

But he says the goal is to reinvent every step of the content distribution process — from customer service (which sounds like a dig at cable carriers), to the interface, to the low cost — just $12 a month. He won’t reveal subscriber numbers so far, but he says demand has been surprisingly strong.

What about broadcasters' claims that he’s infringing on their copyright? He insists he doesn’t understand — he’s simply using technology to make the legal process of sticking an antenna in the air more efficient.

And what about concerns that Aereo will eat into a major source of their revenue? Kanojia counters that with all these new eyeballs on their content, Aereo will likely create value from an advertising perspective. (First Nielsen or another company would have to measure that viewing, but that’s another story.)

If the courts continue to side with Aereo, will satellite TV providers try to recreate the service, using mini antennas to slash their content retrains costs? The company has a slew of patents, so we probably won’t see similar offerings any time soon.

Now we’re watching to see how long the legal battle drags out. The media giants have too much to lose to give up their fight, and Aereo has its own deep pockets, thanks to its backing by Diller’s IAC.

— By CNBC's Juia Boorstin
@JBoorstin

Questions? Comments? MediaMoney@cnbc.com

Disclosure: Comcast is the parent company of both NBC Universal and CNBC.

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