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Media Stocks Triumph from Supreme Court’s Aereo Ruling

If you own shares from media frontrunners such as CBS Corporation ($CBS), 21st Century Fox ($FOX), or Disney ($DIS), the 6-3 Supreme Court decision on Aereo’s legal abilities will have you ready to splurge on a fancy dinner tonight!

What is Aereo?

Launched in 2012, Aereo, a start-up streaming service based in New York City, allows its subscribers to access live television streams through their internet-connected devices. To accomplish this, Aereo presents its users with individual remote antennas, giving them with the ability to record broadcasts for viewing at a later period of time. What distinguished Aereo from other streaming services and gave it its competitive edge is the individual antenna that is provided to each user.

This, however, posed a major issue for major television networks. Broadcasters firmly argued that Aereo and companies that provide similar services were a significant threat in their intrusion into these networks’ main stream of revenue. These networks emphasized the necessity of this capital by deliberating removing their signals from the airwaves if the Supreme Court had decided to rule in favor of Aereo.

aereo

This infographic provides a visual aid to demonstrate how Aereo delivers its service.

Ooh, Rising Shares!

Shares from Comcast ($CMCSA), 21st Century Fox (FOX), Disney (DIS), and CBS Corporation (CBS) skyrocketed after the Supreme Court came to the conclusion that Aereo was in fact violating the rights provided to broadcasters.

Earning the majority of its revenue from retransmission fees and television advertising, CBS possessed the riskiest stake in this case and displayed the most benefit from the outcome, rising almost 8% after the ruling. Local television owners came out of this decision as the biggest beneficiaries. Shooting up 15% after the ruling, the Sinclair Broadcast Group ($SBGI) was the leading gainer. Subsequently, the Gannett Company ($GCI) and the Tribune Company ($TRBAA) rose 4% and 5% respectively.

The 6-3 decision presented by the Supreme Court was a triumph for these television networks. This case was born into an interesting period of time that is ripe with technological changes in addition to habit changes from viewers. The foundation of the economics of television distribution are changing.

Aereo gave its users the ability to stream shows to their devices such as their tablets through the utilization of a personal antenna.

Aereo gave its users the ability to stream shows to their devices such as their tablets through the utilization of a personal antenna.

 

What Happens Now?

Aereo’s founder and chief executive Chet Kanojia had stated that the outcome of the ruling was a “massive setback for consumers” and “sends a chilling message to the technology industry.” Disappointed by the outcome, Kanojia stated that he would still continue to fight for consumers and fight to create technologies that possess a meaningful and positive impact upon the world as a whole.

Do you think the Supreme Court made the correct decision in its ruling? Let me know your thoughts below and be sure to check out the rest of the blog for more trending finance news.

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Lillian is an incoming third-year student at the University of California, San Diego. She is currently pursuing a degree in Economics and Communication. With a minor in Business as well, Lillian is hoping to obtain a career in Marketing while still developing her interest in financial investments.

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