Barry Diller: The internet is eating the cable company

IAC Chairman Barry Diller D11 Credit: Asa Mathat/D: All Things Digital

The wall that broadcasters and cable companies have built around their services is not long for this world, according to Barry Diller, chairman of IAC. It’s not clear who will tear it down, and it’s not clear when it will actually happen, but the “centricity” of the video world is going to shift from cable and satellite to the internet, he said at D11 Wednesday.

Diller, of course, is doing all he can to help that along by investing in projects like Aereo, which has the established broadcasters running to the courtroom in an effort to get it shut down. Aereo allows people to purchase a digital antenna and receive over-the-air television shows, and as we’ve covered extensively, broadcasters are not happy that Aereo isn’t paying them for that right.

“Cable is a great closed system where the masses, now 100 million subscribers of cable, support ESPN that is only watched by 10 percent. That’s a great little plot so long as you can keep everybody inside the closed circle,” Diller said. “We’re out to get the centricity moved to the internet.”

Several days after Diller’s comments, an ESPN spokeswoman reached out in hopes of contradicting his statement on viewership. “Based on 4th Quarter 2012 data for five measured ESPN networks: 88% of households that can receive ESPN networks tune in to one or more of the networks. In 4th Quarter 2012, ESPN networks reached 89 million households and over 200M persons 2+ in those households – about two-thirds of the U.S. population,” the spokeswoman said in a statement, citing data from Nielsen and including viewership of ESPN, ESPN2, ESPNNEWS, ESPNU, and ESPN Deportes.

CNN’s Jeff Zucker, who was billed as a joint speaker alongside Diller but wound up playing second fiddle to questions for Diller, agreed that a shift will take place but wasn’t totally sure, as might be expected given the company that pays his bills, that it would happen all that quickly. Still, “at the end of the day we don’t care which platform you get your information from,” he said, emphasizing CNN’s digital products.

Younger folks are the ones who are going to make this happen, according to Diller. “I think that young people that don’t now subscribe to cable are maybe going to think of Aereo as an alternative because they don’t want to pay 100 bucks a month for cable,” he said.

Which tech companies will make this happen? Diller listed Apple (“I don’t think it’s some big secret that they’ve been working for years on trying to solve television”), Amazon and Microsoft.

This post was updated June 3rd after an ESPN spokeswoman sought to clarify Diller’s remarks.

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