That Was Fast: Big Media Investors Are Okay With Aereo, After All

Remember Thursday? When investors in big TV companies freaked out a bit about Aereo?

That’s all old news now: All the big media companies that took hits yesterday — Comcast, Viacom, Disney, etc. — are trading back where they were on Wednesday, before Barry Diller and his Web video start-up won a legal victory.

So which group got it right? The sky-is-kinda-falling folks who sold media stocks yesterday morning? Or the “What, me worry?” camp that bought them up yesterday afternoon and today?

Insert professional shrug here. The big-TV versus Aereo case is just starting — this week’s ruling was simply a decision not to shut the company down while the trial moves on — and is likely to drag on for years.

Investors don’t like uncertainity, but they’re kind of okay with uncertainity that won’t affect the near-term future. So that’s probably the best explanation for keeping things status quo, share-price-wise.

But just for giggles, let’s pretend that Aereo ends up definitively winning its legal argument: That it can sell access to broadcast-TV programming without paying broadcasters.

What then? Here’s how it might break down for different parts of the Big TV Industrial Complex:

Broadcasters: These guys have the most to lose. In recent years, big over-the-air broadcasters have been able to secure big “retransmission” fees from the cable companies for their stuff — CBS, for instance, has said it should pocket $250 million in retrans fees this year, and that it could end up pocketing as much as $700 million a year a few years from now.

And if Aereo doesn’t need to pay broadcasters to show that stuff, then maybe pay-TV providers like Time Warner Cable and Verizon don’t have to, either. Broadcasters still make most of their money from selling ads, and that business doesn’t have to disappear if viewers head to Aereo or other “over the top” alternatives.

But just like the fees that Netflix and other digital outlets have started paying Big Media companies, retrans fees are extra valuable to the broadcasters because they’re almost 100 percent pure profit.

Cable programmers: Their core business doesn’t get affected, because there’s no way for Aereo to get its hands on stuff like ESPN or Bravo without paying for it.

There is a possibility that Aereo’s customers are happy to just get programming from the four big broadcast networks, and add in a few shows here and there from iTunes, Amazon, Netflix, etc. And if that happens, that’s not good for cable programmers, since it could accelerate cord-cutting.

But it’s just as likely that Aereo ends up striking deals with the cable networks, so it can sell its customers a more complete package, becoming a virtual pay-TV provider itself. And the cable guys would be just fine with that — as long as Aereo agrees to buy bundles.

Pay-TV providers: The negative scenario is one where Aereo attracts lots of subscribers for a broadcast-only package of programming, and many of those customers stop paying the likes of Comcast and Verizon for TV.

But even if that happens, they’ll still end up paying the likes of Comcast and Verizon for broadband. And that’s not a terrible scenario for those guys at all, since broadband margins are much better than video-service margins. And again, if Aereo doesn’t have to pay for broadcast TV, then the pay-TV guys could make the same argument themselves — which is what Time Warner Cable boss Glenn Britt has already been publicly musing about.

Now, let’s make it even more complex: All of the big media companies are in multiple lines of business, which makes it even harder to assess their impact.

Three of the Big Four broadcasters, for instance, are owned by companies with big cable programming businesses, which reduces the hit they might take (it may also give them the option to move some programming from broadcast channels to cable channels, as Disney did when it moved “Monday Night Football” from ABC to ESPN).

And Comcast is a broadcaster, a cable programmer and a cable provider. What does Aereo mean for it?

So it’s easy to see why Barry Diller is betting on Aereo: If it works, it could change the way money flows in the TV business, and he could be in a position to pocket some of the flow himself.

But that doesn’t mean Aereo will fundamentally disrupt the TV business. Or at least that’s what Wall Street seems to think today.