Murdoch's News Corp. said Monday it may end Fox's 26-year run as a free broadcast channel if U.S. courts continue to allow the Diller-backed Internet startup Aereo Inc. to retransmit broadcast programming. The move would mean Aereo could no longer use its technology to obtain and resell Fox's signal for free from broadcast antennas.
The showdown pits Murdoch, 82, against his former ally Diller, 71, who helped start the Fox network in the 1980s before building his own media empire. And if CBS, NBC and ABC follow Fox in curtailing their free broadcast fare, it would hasten the end of the broadcast TV system as it has existed since "The Honeymooners," the Mouseketeers and Edward R. Murrow ruled the airwaves in the 1950s.
"We need to be able to be fairly compensated for our content," News Corp. Chief Operating Officer Chase Carey told TV executives yesterday at a conference in Las Vegas. "We can't sit idly by and let an entity steal our signal. We will move to a subscription model if that's our only recourse." News Corp. and Diller's Aereo represent opposite extremes of today's evolving television world. News Corp. pays billions for some of the best content on TV, from National Football League games to "The Simpsons" and "New Girl." Aereo pays nothing for its broadcast content, then offers it cheaply to users.
Diller is shaking up the market by offering popular networks online and letting users store shows for later viewing, part of a trend toward severing ties with traditional pay-TV services. Aereo captures over-the-air broadcast TV signals with tiny antennas and delivers them to subscribers on computers and smartphones.
News Corp., meanwhile, wants to protect the fees that it charges cable and satellite companies for its signal -- even if it means losing broadcast viewers. If Aereo is allowed to continue, Fox and its affiliate stations could stop broadcasting and serve only pay-TV customers, Carey said. Only cable or satellite TV subscribers can access the encrypted signals, which are decoded with a box in each home.
A U.S. appeals court last week rejected broadcasters' pleas to shut down Aereo.
Shares of News Corp., where Murdoch serves as chairman and chief executive officer, fell 0.8 percent to $31.17 at the close in New York. The shares have climbed 22 percent this year.
The broadcast networks sued Aereo in March 2012, claiming it infringed copyrights with its service.