This morning, Aereo filed for bankruptcy under Chapter 11, marking the end of the road for the cloud-based TV startup. The company launched in 2012 using micro-antennas and cloud DVR technology to provide near-live TV access to 30 channels to subscribers for as low as $8/month.
But after losing a fierce legal battle with broadcast networks, that went all the way to the Supreme Court this summer, the company is looking to figure out next steps as it shuts down.
We hopped on the phone with CEO and founder Chet Kanojia to discuss the news. Check out the full transcript below:
TechCrunch: It’s been about five months since the Supreme Court ruled in favor of the broadcast networks and deemed Aereo illegal. What’s been going on with Aereo during that time?
Chet Kanojia: As the law changed, it took us a while to figure out the possible ways that we could look at the future of the company. Our team was patient for long enough to figure out which avenue made the most sense, and that took a while to sort. There was a lot of interest in figuring out the value of the technology, the partnerships, and the components of the company. As we explored more, knowing the toll litigation took and the additional costs, we determined that the right thing to do was to go through Chapter 11 restructuring.
Obviously, once we made that decision, it took us a while to get the details of that figured out, which brings us to this morning.
TC: What is the process moving forward?
CK: With the restructuring, we can either recapitalize the technology with a new business plan or sell the assets. We’ve brought someone on, Lawton Bloom from Argus, to make sure it’s a clean and fair and balanced process.
TC: What have you been hearing from your investors over the past few months and leading up to today?
CK: Everybody is deeply disappointed — the team, investors, and a lot of consumers. Our board obviously helped us come to this decision, after exhausting all possibilities and scenarios and going down every branch of the decision tree to plan the probability of success for each. Based on all that, we decided that the restructuring was the best was to make sure our assets are maximized for our shareholders. But we’re deeply disappointed. The court made an incredibly wrong decision, but be that as it may, we can’t appeal that decision anymore so it’s time to take next steps.
TC: How do you think Aereo, its outcome as a company and in the Supreme Court, will affect the future of the TV industry and its disruption?
CK: I think we played an integral role in bringing to the forefront the imbalances of the industry — the Archaean business models, the lack of focus on consumer interest. I think we brought that dialogue even more attention. Once a day there’s a story in the news about cord cutting. There is evidence that around 10 million households are internet only in the United States.
We didn’t create the phenomenon, but we rose to fill that opportunity. It’s inevitable that we’ll get there. Even now you can see CBS and HBO making moves in this direction, but those are just band aids. Aereo was positioned in the same place that we’ll find the TV industry in the next five to seven years.
TC: If you could go back and do anything differently, would you?
CK: Hindsight is always 20/20. I’d go back and look at all the decisions we made, and very honestly, I think we executed flawlessly. There isn’t much we could have done to avoid this other than not starting Aereo, and starting this company is something I’d never regret. I learned to create something that touched a chord in people, so there are few regrets on that front.
Would we tweak one or two percent of the decisions? Sure, but in entirety our decision-making was pitch perfect.
We were a startup taking on a $130 billion+ industry, and I think we executed flawlessly. I go back and ask the investors and the board and everyone’s consensus, the resounding verdict, has been that our decisions were made carefully and cautiously. We were taking on a big idea and a big risk and everyone understood that. We were willing to take those risks to chase the dream.
TC: What would you say to startups who are looking to break into the TV industry or encourage cord cutting?
CK: It’s inevitable that cord cutting is going to happen. There are immediate opportunities and there are even bigger opportunities in the future to serve consumer need, and that won’t come from incumbents. Their business model won’t permit it.
People have to make their own assessments, but there is a lot of innovation in the space, which is exciting. I look at Aereo as a huge success on a lot of different fronts. The financial outcome might not have been a success, but that is just one piece. We raised the dialogue around the problems in the industry, creating a great product that connected consumers to incredible technology. And we did it with a great team.
If you measure us by any of those standards, we’re a success. The financial outcome is just one aspect.
And so there are a lot of interesting things happening in this industry for anyone willing to take the risk.
TC: What are your plans moving forward, Chet?
CK: Right now I have to see Aereo to its last conclusion, so that’s the focus right now. But people like me have a hard time setting things down.
I’m not sure whether I’ll get into media again, but one thing I promised myself is that whatever I do next, it has to have a similar level of meaningfulness and relevancy for it to be exciting and worth putting my energy into.