With mega-merger, TWC-Comcast should make Aereo into an ally

February 13, 2014: 5:29 PM ET

The cloud-TV startup has been an enemy of broadcasters. The recently announced merger will complicate things.

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FORTUNE -- Comcast (CMCSA) faces an uphill battle in getting its $43 billion merger with Time Warner Cable (TWC) approved by antitrust regulators.

The issues are myriad, as plenty of commentators have pointed out. Speaking broadly, there's the issue of the "unprecedented gatekeeper power" that the combined company will have. TWC and Comcast will be the country's largest Internet service provider, largest video provider, a top phone provider, as well as a movie studio, a broadcaster, and it will control many cable channels. Some have predicted that the FCC will use net neutrality enforcement as a bargaining chip in the antitrust approval process, since Congress was not able to pass net neutrality as a law on its own.

On the broadcast side, Time Warner and Comcast will have to show that they don't compete. They don't actually operate in overlapping areas, and so the $45.2 billion merger isn't going to consolidate power in any one region. But on a national level, they might have to show that there are other, non-Comcast, non-Time Warner options for consumers.

Enter an unlikely ally: Aereo.

Launched two years ago, Aereo brings broadcast television to cord-cutters over the Internet. The company does not pay retransmission fees to broadcasters because it has designed a clever "personal antenna" workaround.

MORE: What the Comcast-Time Warner deal says about the future of media

Aereo's service is a threat to the broadcasters. Broadcasters have repeatedly sued Aereo for unauthorized retransmission, including Comcast's NBC. Aereo has won two cases. Despite that, Comcast CEO Brian Roberts maintains that Aereo's service is illegal. The latest lawsuit -- ABC TV v. Aereo -- is set to be heard by the U.S. Supreme Court on April 22.

But Thursday's news changes things. Because Aereo offers consumers an alternative to Time Warner and Comcast, it might serve as a "maverick" for lawyers. Mavericks are smaller companies that disrupt a large company's pricing strategy by charging less for competitive services. The issue came up when Anheuser Busch-Inbev acquired Grupo Modelo, because Modelo's low prices kept Anheuser and competitor MillerCoors competitive. (The merger was approved anyway.)

Comcast has explicitly cited other streaming services as a reason it is not creating a TV monopoly (or, in industry parlance, a multichannel video programming distributor monopoly). From the deal's press release:

A number of online businesses like Apple, Google, Amazon, Hulu, Netflix, and a host of smaller companies are entering the online video space and trying to position themselves as competitors. While we view online businesses as complementary to our business, previous antitrust concerns about further cable consolidation are truly antiquated in light of today's marketplace realities.

Reading between the corporate doublespeak (are they competition or not?), Comcast is basically arguing that the existence of many content options means a little $42.5 billion merger among friends is no big deal.

Aereo isn't named, but it is the only competitor that offers access to on-demand broadcast content. In making its antitrust case, Comcast will want to define the competitive landscape as broadly as possible. "Comcast would say there is all kinds of competition, not just from Dish Network (DISH) and satellites and telecoms, but from all these new companies coming up, including Aereo," says Ronald D. Rotunda, professor of jurisprudence at Chapman University. He compared it to the auto industry. "If you decide the market for cars only includes companies that began in the U.S., there are only three car companies. But when you look at cars people can buy, there are two dozen or more companies from around the world."

MORE: Will your clothing spy on you?

Even before the deal, there was an argument for broadcasters like Comcast to support Aereo. Rich Greenfield, an analyst with BTIG, has argued that Comcast would be better served to support Aereo because of its interests in a similar cloud service called Comcast X1. "Comcast is a big proponent of cloud DVR, and that has only been officially sanctioned in [one part of the country]. By buying Time Warner, you have a big expansion of its cloud-DVR service," Greenfield said.

Aereo, backed by $97 million in venture capital from Barry Diller, IAC (IACI), and other venture firms, has been an enemy of the broadcast world since it launched in 2012. After today, it's starting to look more like an ally.

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