PARK CITY, UTAH (TheStreet) -- Chet Kanojia's entire business could be shuttered by the end of the year, but that didn't prevent the Aereo CEO from dropping in on the Sundance Film Festival to court independent filmmakers as part of his search for new content.
Aereo, an online platform that streams television networks, will be a focus of Supreme Court debate later this year when a case brought by CBS (CBS - Get Report), 21st Century Fox (FOXA - Get Report), Disney (DIS), owner of ABC, and Comcast (CMCSA), owner of NBC, may determine whether the company can continue to rebroadcast over-the-air TV signals to its Internet-based subscription service.
Kanojia would like to make Aereo a low-cost destination for Indie film, a sort-of alternative to Netflix (NFLX).
"We've started with a technology that lets consumers get broadcast TV, but ultimately as we open that platform to new creators and new business models, it could be a pretty attractive aggregation point," Kanojia said in an interview Friday at Sundance. "We think creators need a new platform."The life cycle of independent film usually begins with a theatrical release, and if the film does well, it may receive a spin on a cable TV network such as AMC Networks' (AMCX) IFC, or for documentaries, Time Warner's (TWX) CNN. Increasingly, the end-game in distribution is video-on-demand, the film industry's fastest growing source of revenue and a business where Netflix has become the biggest player. Time Warner's HBO GO, Hulu, Amazon (AMZN) and Apple's (AAPL) iTunes are also buying films as each tries to acquire more content to match their audience's tastes. Over time, Kanojia hopes to make Aereo, which he founded, a destination for filmmakers looking for a place to show their work. Seeking alliances with Indie film would appear to make sense for Aereo given that many of the largest Hollywood studios -- Comcast (Universal) and Disney -- are owned by the same companies trying to put Kanojia out of business.
The Indie film market is in a transition as VOD sales rise and theatrical attendance tilts to largescale "event" movies as Hollywood continues to emphasize sci-fi thrillers, sequels and dramas with well-known stars. Alternative to Netflix could give filmmakers more choices and the possibility of more favorable revenue-sharing arrangements. "Our perspective is that people who create can determine what the financial terms look like," Kanojia said. "People who create should be able to determine what they put in front of consumer and how they do it, so I think that will be a slightly different approach that what you see." Aereo's future, though, ultimately rides on the Supreme Court. The court is expected to take up the case later this year with a ruling either in the fall or in early 2015. The networks argue Aereo is stealing their content and illegally charging consumers to watch their programming. Kanojia counters that Aereo is providing a service by making publicly owned TV signals available to consumers whenever and wherever they want it.
Aereo recently began operating in Cincinnati, the 11th U.S. market where the service is available. Kanojia said Aereo will be available in as many as four additional markets by the end of March. The pending Supreme Court case, he said, hasn't slowed the company's expansion plans. "The only way we sleep at night is that we believe in the merits of our position and we think it's a fair system and it will prevail on its merits," Kanojia said. "Of course, the future is unwritten so all we can do is put our blinkers on and execute."
-- By Leon Lazaroff in Park City, Utah
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