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Like a long-ago military invasion that didn’t infiltrate far enough to root out a hostile regime, broadcasters are reviewing their decade-old litigation with digital video recorder pioneer ReplayTV with some regret.
The rumination stems from a new commercial-deleting feature called “Auto Hop” introduced last week by Dish Network (s DISH) for its Hopper DVRs. The feature essentially strips out commercial pods for shows recorded on the major broadcast TV networks.
Once again, broadcasters are facing a DVR function that undermines their ad-supported business model. And once again, they seem poised to litigate over it.
”I think this is an attack on our eco system,” NBC (s CMCSA) Broadcasting chairman Ted Harbert said during a Monday conference call held in conjunction with NBC’s upfront presentation to advertisers. “I’m not for it.”
With subscriber growth for satellite TV services stagnating, Dish undoubtedly sees such a consumer-friendly feature as a way to differentiate itself and expand on its current count of 14 million U.S. customers. Neither Dish’s chief satellite competitor, DirecTV,(s DTV) or any rival cable or telco pay TV operator has been bold — or disrespectful enough — to undermine programmers in this way.
“Auto Hop adds to an already long list of broadcast-unfriendly features of Dish’s service, including 30 second skip buttons on their remote controls (other DVR services, including DirecTV and TiVo, have ‘locked’ this feature out of sight; Dish boldly promotes it on a button on the remote),” wrote Sanford Bernstein senior analyst Craig Moffett last week.
Should broadcasters seek legal remedies to stop Dish, they will have to battle a determined adversary, led by chairman Charlie Ergen, who’s no stranger to protracted, nasty media litigation.
But as the Hollywood Reporter noted, it didn’t have to be this way. In 2001, the networks sued ReplayTV parent company Sonicblue over a DVR feature that let users fast-forward through commercials with a press of a button.
Sonicblue filed for bankruptcy in 2003, before a federal court could decide the case, and the general perception was that the networks managed to sue ReplayTV out of existence. With ReplayTV vanquished, broadcasters never followed through on their quest for a ruling that commercial-skipping DVRs indeed undermine economic underpinnings of — and thus violate — copyrighted material.
In the interim, legal precedent unfavorable to broadcasters was established, such a 2009 federal appeals court ruling that Cablevision did not violate the copyrights of network shows when it offered its subscribers a remote-storage DVR.
Meanwhile, Dish promises to be a tougher adversary than Sonicblue.
Dish’s ongoing court battle with AMC Networks over defunct HD programming service Voom HD is just once example of its pugnaciousness. Earlier this month, a New York court ruled that Dish intentionally destroyed evidence in the four-year-old, $2.5 billion case, which stemmed from the satellite company’s decision to drop carriage of the AMC channels back in 2008. The court upheld AMC’s case, which now appears set for trial.
Perhaps coincidentally — perhaps not — Dish revealed last week that it doesn’t intend to renew its carriage deal for AMC’s cable networks, which expires June 30, despite the fact that ratings are up big on the AMC flagship channel.