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Aereo's Kanojia Ready for a Fight, Bring on the Lawyers

Stocks in this article: CBS NWSA CMCSA DIS TWC LBTYA

NEW YORK ( TheStreet) -- Aereo's Chet Kanojia, the cool and determined founder and CEO of the would-be television disruptor, wouldn't tell a New York conference how many subscribers his ambitious start-up has managed to attract, but his comments did reveal something about how he spends his days.

"Half the time I wonder what percentage of our subscribers are actually consumers, versus media executives or lawyers, or whatever," Kanojia said, to the laughter and amusement of attendees at Ad Age's Digital Conference in Manhattan on Wednesday.

These days, closely-held Aereo is as much a fledgling media outlet as it is a litigant. Indeed, Kanojia hasn't made many friends among the country's largest media companies since starting an online service that delivers television programs over the Internet. Aereo is currently only available in the New York metro area but Kanojia said 22 additional U.S. cities will have access to the service by the summer.

Aereo's own lawyers did have reason to celebrate on April 1 when a U.S. appeals court rejected a petition from CBS (CBS), Disney's (DIS) ABC, News Corp.'s (NWSA) Fox and Comcast's (CMCSA) NBC charging that Kanojia's company was illegally re-selling media property. More legal battles are pending.

The country's largest broadcast networks argue that Aereo, which counts Barry Diller's IAC/InterActive (IACI) as a shareholder, should be paying them "re-transmission" fees to carry American Idol or CSI: Crime Scene Investigation as part of its online service. Kanojia counters that the broadcasters use government-issued free-over-the-air spectrum to deliver their programming, and therefore Aereo is simply providing a valuable service at a reasonable price of $8 to $12 a month, much less than the typical pay-TV plan.

Pay-TV channels such as Bloomberg Television, Kanojia told the advertising conclave, have cut direct deals with Aereo to carry their programming. Aereo may also carry "quality products that are independent" and not able to get onto the channel slate at pay-TV outlets. He said the country's cable and satellite-TV operators created a monopoly of service while some programmers "can't get on the dial," he said.

Broadcasters, of course, are petrified that Aereo will put an end to CBS' ability to demand large payments from pay-TV carriers such as Time Warner Cable (TWC) and Liberty Global (LBTYA), owner of DirecTV, if consumers are able to access the shows they want via a comparatively inexpensive service.

"The government granted the spectrum explicitly so people would have access to free television," Kanojia said, citing a statistic from the National Association of Broadcasters that 54 million U.S. consumers get television using an antennae. "There's been no restriction on what kind of an antennae, what size, where it's placed. Who provides the antennae has got nothing to do with it."

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