What’s at stake: Networks head to court over AutoHop


Dish NetworkOn 7/2, the legal battle over AutoHop between Dish and the broadcast networks is scheduled to start in New York, where U.S. District Judge Laura Swain will hear arguments to determine whether the case will be heard in New York or LA.

Dish Network’s new ad-skipping feature, AutoHop, enables subscribers to black out ads on programs they’ve saved on their DVRs. When activated, AutoHop turns the screen dark when a commercial break arrives, then returns to the show a few seconds later. The AutoHop, launched in May, is only available for shows airing on CBS, ABC, NBC and Fox–not on cable channels.

CBS, NBC and Fox have sued, saying the feature violates copyright laws and jeopardizes the financial foundation of the entire television industry. Fox said that AutoHop’s ability to show programming without the ads is the same as re-broadcasting – a copyright restriction in the agreement with the broadcasting company that Dish violates. Fox argues that Dish’s new PrimeTime Anytime service “makes an unauthorized copy of the entire primetime broadcast schedule for all four major networks every night” and then enables customers to watch the content without commercials using the Auto Hop technology, which is different from traditional fast-forwarding DVRs in that it skips ads entirely.”

According to Fox spokesperson Scott Grogin, the ad-hopping feature could eventually turn out to be “destroying the fundamental underpinnings of the broadcast television ecosystem.”

Dish maintains that its new feature is legal: “I think it was settled 28 years ago in the Betamax case,” Dish Network Chairman Charlie Ergen told Congress last week, referring to the landmark 1984 case that established that consumers did not violate copyright laws by recording shows at home for their own enjoyment.

Judge Swain issued a preliminary restraining order 5/30 that bars Fox from pursuing its suit against Dish until the 7/2 hearing. She granted Dish’s request, ruling that Fox, NBC and CBS must show cause on that date why their suits should proceed while Dish’s request for a declaratory judgment that its AutoHop feature does not violate copyright laws is heard.

Dish filed its suit 5/24 in New York, hours before Fox filed its suit in LA. NBC and CBS then followed with their own suits against Dish the same day in LA.

Dish’s motion asked the court to enjoin Fox, NBC and CBS from further pursuing their cases—the same day that the networks filed their suits. Dish asked for a declaratory judgment of whether the ad-skipping technology complies with copyright law: “Consumers should be able to fairly choose for themselves what they do and do not want to watch,” Dish SVP/Programming David Shull said in a statement. “Viewers have been skipping commercials since the advent of the remote control; we are giving them a feature they want and that gives them more control.”

The federal judge’s temporary restraining order against Fox could be lifted at the 7/2 hearing, where she will consider Dish’s motion.

“We’re pleased that the New York federal court has entered a TRO against Fox until the New York court decides whether the suits filed by Fox, CBS and NBC in California should be enjoined in favor of Dish’s suit in New York,” said Dish EVP/ General Counsel, R. Stanton Dodge, in a statement. “Dish looks forward to presenting its case and prevailing on the merits.”

Fox responded to the ruling: “We look forward to making our case against DISH for copyright infringement and breach of contract in court,” a Fox spokesman was quoted as saying.

If not stopped, Fox argues, Dish “will ultimately destroy the advertising-supported ecosystem that provides consumers with the choice to enjoy free, over-the-air, varied, high-quality primetime broadcast programming.”

“I can’t produce premium shows like ‘CSI’ without advertising,” CBS Corp. CEO  Les Moonves said.

RBR-TVBR observation: At least the ability to offer AutoHop on live TV is not possible. This case is very important, as it’s not just Dish that’s offering new ad-skipping technologies. Comcast is developing a technology that would trigger a commercial to pop up when viewers tried to fast-forward through ads. That allows new inventory to be placed, but still kills the ads that were originally placed with the programming. As we’ve said before, it’s patently unfair to only target the broadcast networks for ad skipping—but the cable networks are voicing concern. The ironic thing about all of this is Dish is a heavy TV advertiser, running campaigns right now for “The Hopper.” Each time a viewer AutoHops through a set of spots they are missing Dish’s ads, too.

Last, but not least, AutoHop may also affect ratings. Think about how many tune-in ads for other shows the networks are running. If a viewer doesn’t see them, they may not watch these shows that are being promoted.