FilmOn launches new remote TV service

By Emily Steel in New York

FilmOn, the controversial start-up from Greek billionaire Alki David, is raising the stakes in the battle over the future of television with a new service that lets viewers remotely watch local television broadcasts.

Through its “Teleport Technology”, a person in New York can watch local television broadcast in Los Angeles, San Francisco, Chicago, Miami and Denver, among other US cities. The free service is launching in the US but could extend internationally.

The technology is likely to spark concern among traditional broadcasters such as ABC, CBS, Fox and NBC who are fighting the advance of television streaming services from the likes of FilmOn and its rival Aereo, which allow people to watch broadcast television without paying for traditional cable subscriptions.

At the heart of the battle is the threat to so-called retransmission fees that cable companies pay to carry broadcasters’ content.

For years, broadcasters offered their signals to cable, satellite and telecoms groups for free. In the past five years, however, broadcasters started demanding that distributors pay to retransmit their programming, creating a new revenue stream worth more than $2bn a year that could soar to $12bn, according to Rich Greenfield, a BTIG Research analyst. Those fees account for as much as a third of some broadcaster’s profits.

While only about 10 per cent of Americans rely on “rabbit ear” antennas for watching television, those retransmission fees could come under threat as more viewers cancel traditional pay-television subscriptions in favour of cheaper online streaming alternatives, such as Aereo and Netflix.

A Supreme Court battle now looms in the US over the legality of television services such as FilmOn and Aereo. Broadcasters are trying to shut down the services, claiming that they violate copyright by rebroadcasting signals without consent. FilmOn and Aereo claim instead that they have invented a new and more convenient form of rabbit ears that allow Americans to watch free-to-air television.

The new FilmOn teleport service allows consumers to watch the television shows they want to watch when and where they want to watch them at the same time that it is broadening the audience for independent broadcasters, said Mr David, the self-described “serial killer media entrepreneur” also behind the peer-to-peer streaming site BattleCam.com. FilmOn makes money by selling advertising as well as access to high-definition video and other services.

“It is not killing the media industry at all,” he said. “The media industry has ultimately killed itself.”

Aereo, the subscription-based television streaming company backed by Barry Diller’s IAC, has won a series of court battles and is due to argue its case before the Supreme Court this spring. FilmOn, which offers a similar service for free, has filed a motion to intervene in the case.

Unlike Aereo, court restrictions bar FilmOn from offering major network television through its service in most locations. Mr David said that those restrictions inspired the company to invent its latest offering. “Desperation is the mother of invention,” he said.

FilmOn now offers more than 350 live television channels as well as original programming globally and across devices. Last month, 20m FilmOn viewers watched more than 1.2bn video streams.