Aereo says it turned a profit in some markets, wants partners


By Liana B. Baker

Dec 10 (Reuters) - The chief executive of closely watchedInternet TV startup Aereo said on Tuesday that the controversialcompany had turned a profit in some of its markets, and is alsolooking for broadband partners to pair with its service.

Speaking at an investor conference hosted by UBS, ChiefExecutive Officer Chet Kanojia said it takes about 6,500subscribers in a city to break even and that some markets hadalready turned profitable.

He did not identify the markets, but said cities such asDenver and Detroit were performing well, while the expansioninto Miami was disappointing. New York, where Aereo is based,had a mediocre start, but is showing a turnaround.

Aereo was launched in March 2012 at $12 per month in NewYork and has since expanded to about 10 cities with plans toenter several more next year. It lets subscribers stream livebroadcasts of TV channels on phones, tablet computers and otherdevices using individual antennas. Users can watch the majorbroadcast networks such as CBS, NBC, FOX, ABC, the CW, PBS,Telemundo and other channels.

Its largest investor is IAC, which counts BarryDiller as a chairman. Diller has been a vocal proponent ofAereo, taking on its opponents publicly, whether they arebroadcasters or the National Football League.

The TV industry sees the service as a threat to its abilityto control subscription fees and generate advertising income,its two main sources of revenue.

In October, broadcasters ABC, which is owned by WaltDisney Co, CBS Corp, Comcast Corp's NBC Universal and Twenty-First Century Fox Inc, askedthe Supreme Court to hear their case claiming the online servicesteals copyrighted television content.


Kanojia said Aereo has so far invested $65 million indeveloping and releasing its product. Last January, the companyraised $38 million, which added to a previous round of fundingof $20.5 million.

Aereo has never revealed subscriber numbers, but Kanojiasaid the company is aiming to reach 2 million to 5 millioncustomers. He said churn, or the rate of cancellation was"fairly low" at about 2 percent.

Aereo is looking for possible tie ups with broadband orInternet bandwidth providers, Kanojia said. A few times duringthe presentation he said he could envision Aereo's service beingsold alongside broadband in a bundle that costs about $50, whichhe called a "lot more rational" TV service than those offered bycable companies. He did not name any potential partners.

Kanojia said he had made a mistake by not making the serviceavailable on televisions when it came out. Initially, Aereo wasfocused on the iPad only, but data now shows that 65 percent ofpeople using the service view it on a big screen, whetherthrough Apple TV, Roku streaming service, or by physicallyconnecting their computer or tablet to a television.

"What they are using is the television, so there is a madscramble how to make that easier," he said.

Aereo plans to make announcements at the ConsumerElectronics Show in January that could include putting theservice in gaming consoles or installing it directly onto TVsets, Kanojia added.


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