CORRECTED-UPDATE 1-Aereo targets 30 pct of U.S. broadcasters' market -Diller

Mon Apr 29, 2013 7:53pm EDT

(Corrects in 3rd paragraph Aereo's place of operation to New York from Los Angeles)

By Ronald Grover

LOS ANGELES, April 29 (Reuters) - Barry Diller, the billionaire media mogul who is backing the startup Aereo TV service, said on Monday it expects to reach between 25 and 30 percent of the U.S. television audience with the wireless service that broadcasters say undermines the economics of their business.

On April 1 a federal appeals court denied a motion by major media companies to shut down Aereo, which uses large numbers of TV antennas to capture broadcast signals for its subscribers, who do not want to pay cable and satellite operator's higher cable fees.

Diller, speaking in Los Angeles to a conference sponsored by the Milken Institute, estimates the service, which is currently only in New York and will soon start in Boston, would roll out to 22 more markets by the end of the year and eventually reach 25 million to 30 million potential subscribers for its $7.99 a month services.

"Broadcasters are saying, 'This is awful,' but the courts have spoken" said Diller, who is also chairman of IAC. "They're just trying to create a controversy that they can take to Congress to get some help."

Diller said Aereo has no plans to hire Washington lobbyists to battle the media giants, relying instead on "many millions of TV consumers" who will argue on Aereo's behalf.

"I thank the broadcasters for making all that noise on our behalf," he said in an interview after the session.

Broadcasters intend to continue their fight against Aereo in court. They argue that the service is stealing their signals and delivering them to consumers, eliminating the payments they get from cable and satellite operators who carry their channels.

"We will continue to aggressively pursue this in the courts and believe we will prevail," a spokesman for News Corp's Fox said on Monday. "We must be able to operate under a business model where we receive fair compensation from parties that want to redistribute our product."

Aereo does not break out the numbers of its subscribers, and Diller said it will "be expensive for marketing to reach potential users once the technology is in place throughout the country." The technology relies on capturing broadcast signals with a farm of small antennas and then giving subscribers access to them over the internet.

Diller made light of whether he intended to negotiate with broadcasters, some of whom have threatened to take their channels off over-the-air broadcast and to put them instead only on cable and satellite services, where Aereo cannot capture the signal.

"If they think they can take prime-time programming away from their affiliate TV stations, they will learn soon enough that's not the case," he said "I've told broadcast executives I'm happy to negotiate with them. As soon as Radio Shack buys them antennas, we'll buy them, too." (Reporting by Ronald Grover; Editing by Chris Reese, Dan Grebler and Bob Burgdorfer)

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