Dish’s Legal Fight With Broadcasters Seen Affecting Future Retrans Pacts

Fox Entertainment, CBS and NBCUniversal each sued Dish separately last week, with NBCU arguing that Dish and its Auto Hop feature didn’t “have the authority to tamper with the ads from broadcast replays on a wholesale basis for its own economic and commercial advantage.” CBS said Dish’s Auto Hop takes content and “modifies it in a manner that is unauthorized and illegal” under existing contracts. Dish, in filing a suit seeking a ruling that Auto Hop doesn’t violate copyrights, argued that users have been fast-forwarding through commercials since “the advent of the VCR.” Many DVR remote controls can be programmed to include a 30-second skip feature and Dish has had one “for years,” Dish said in a lawsuit.

Dish unveiled Auto Hop earlier this month as an extension of the PrimeTime Anytime service available with its Hopper DVR. PrimeTime Anytime allows the user to record all four broadcast networks during primetime and store eight days’ worth of content. With Auto Hop, PrimeTime Anytime content can be viewed without commercials if the user is willing to wait until the next morning to watch it. Consumers have to turn on Auto Hop, select a program to watch and then press a key confirming whether they want to watch the content with or without commercials.

The Auto Hop feature will likely be precluded as Dish’s retrans deals with TV stations expire and are replaced by new versions, broadcast attorneys said. Auto Hop is a key feature of Dish’s Hopper DVR that shipped in March with six tuners and a two-terabyte hard drive, a portion of which is dedicated to storing PrimeTime Anytime content. Broadcast lawyers had said the ad-skipping feature could make for complicated retrans renewals with Dish and the stations it carries (CD May 14 p5).

"Long term, Dish isn’t going to do this without paying for it and the question is whether during the term of the current retransmission deals it can get away with this until they expire,” said communications lawyer John Hane of the Pillsbury law firm that’s worked with Dish and the broadcast networks but isn’t involved in the current cases. Another broadcast lawyer not involved in the case said he shared Hane’s sentiments. “This is something Dish claims it has the right to do under the Copyright Act and probably isn’t expressly precluded by their current retransmission agreements, but it will be precluded” in future deals, Hane said. “This is a temporary marketing boost for Dish and maybe they will get away with it for a while, but there is no free lunch,” Hane said: “And there are some good copyright claims here and it could be stopped on copyright grounds earlier” than the expiration of retransmission agreements. Dish said in its suit that Auto Hop doesn’t “breach re-broadcast agreement” with the networks.

Fox, in its lawsuit, branded PrimeTime Anytime a “bootleg broadcast video on-demand service” that includes an “unauthorized library” for access to content. “To make matters worse,” Dish operates PrimeTime so that the copies it makes are viewable commercial-free, Fox said. Fox’s argument is “compelling,” Hane said. “It’s a lot of TV that is being recorded and only a small percentage of which is being watched, and to me it sounds a lot like a library."

Auto Hop doesn’t alter or modify the broadcast signal, Dish said in its suit. Commercials aren’t erased or deleted and remain stored on the Hopper hard drive, the company said. “Auto Hop is a legitimate, legal DVR feature and Dish is in full compliance with copyright law and its rebroadcast agreements with the major television networks,” Dish said.

Arguments and legal battles over a DVR’s ability to fast-forward through commercials have existed since the technology first arrived on the market in the late 1990s. DVR supplier ReplayTV was sued in 2001 over its “Commercial Advance” feature that created markers during recording of primetime programming to allow ads to be completely skipped during playback. Cablevision also marketed remote DVR service that enabled users to create a copy of a show and store it on the cable operator’s server with no sharing of content. Cablevision was sued, but won the legal battle and launched the service in 2011. Aereo was sued by broadcasters, including Fox and CBS, earlier this year for copyright infringement. Broadcasters have argued Aereo is copying and retransmitting their programming over the Internet unlawfully. Aereo countered that by assigning miniature antennas to each user in the New York area, it’s providing legal access to free over-the-air content. A hearing in U.S. District Court in New York on a preliminary injunction in the lawsuit is scheduled for Wednesday.

"Technology is making it easier and easier to skip advertising and, in an IP-based TV world with cloud storage becoming increasingly prevalent, suing Dish over PrimeTime Anytime and Auto Hop does not appear to be the right answer,” BTIG analyst Richard Greenfield said in a note to investors. “Media companies need to adapt to changing consumer preferences and use technology to their advantage. Lawsuits are not the solution to broadcasters’ problems, innovation is.”