Dish ‘Intentionally Concealed’ AutoHop in Retrans Talks, CBS Now Alleges
Dish Network “intentionally concealed” AutoHop when negotiating with CBS on a retransmission agreement the parties signed Jan. 5, 2012, the broadcast network said in an amended complaint Tuesday in its ongoing legal battle over the DBS company’s commercial-skipping feature. The amended complaint in U.S. District Court in Manhattan adds “fraudulent concealment and inducement” allegations against Dish for failing to disclose AutoHop during the retrans negotiations, CBS said. The network meanwhile was the subject of a letter a nonprofit that seeks changes to FCC retrans rules sent the agency. Public Knowledge linked the issue to the broadcaster’s directing its CNET news website to pull Dish’s new Hopper with Sling DVR from consideration for its Best of CES awards (CD Jan 14 p14).
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CBS and the other major broadcast networks previously made contributory copyright infringement and other claims against Dish for AutoHop. “It is now apparent” that during the negotiations, which peaked in December 2011, that Dish “had developed a system that would record and playback all CBS primetime television programming on-demand without commercials, and had definite plans to offer that feature to subscribers,” CBS said Tuesday. Yet, during the negotiations, Dish “intentionally concealed this fact from CBS,” it said. During the talks, Dish executives described to CBS “specific systems” Dish was developing for introduction to subscribers, including its Hopper DVR, but said nothing about AutoHop, it said.
In one negotiating session, Dish executives including Chairman Charles Ergen and CEO Joe Clayton met with CBS brass to trumpet the Hopper, even showing off the Hopper’s kangaroo logo and “a stuffed animal in the form of a kangaroo,” CBS said. During this meeting, no Dish executive made reference to AutoHop “or any other system that had been developed to enable the Hopper to record and playback primetime broadcast programming on a commercial-free basis,” it said. By contrast, after the retrans agreement took effect, images of the kangaroo logo have appeared in Dish ads touting the Hopper and its AutoHop feature, encouraging subscribers to watch commercial-free TV, the broadcaster said. CBS used the talks to put Dish “on notice” that “CBS’s intent was not to address new product features or services” that Dish might offer or to “broaden the scope” of Dish’s rights under the retrans agreement, CBS said. So had Dish disclosed details on AutoHop during the talks, CBS would not have signed the retrans agreement “on the terms set forth in the current agreement,” it said. CBS didn’t learn about AutoHop until just before Dish introduced it May 10, CBS said. Dish representatives didn’t immediately comment.
Public Knowledge meanwhile is concerned that CBS’s interference with CNET and the retrans consent model undermine media ownership values. CBS’s interference with CNET’s editorial independence shows that the ability of media conglomerates to distort news and coordinated retrans negotiations between TV stations “means that for many purposes they are engaging as one entity even though a formal merger between them would be otherwise unlawful,” PK said in a filing in docket 10-71 (http://xrl.us/bobz8o). It said the actions of CBS should serve notice that the FCC “must remain vigilant when considering revisions to its rules that could have the unintended consequence of reducing viewpoint diversity.” PK said CBS has demonstrated that when broadcasters and other media conglomerates extend their influence to the Internet, “they threaten diversity and competition within the marketplace of ideas.” Because of the joint negotiations between ostensible competitors, TV stations are better able to create “a unified front in demanding higher fees, which are ultimately passed along to consumers,” PK said. Broadcasters have said retrans works well as-is. The broadcast network had no comment on PK’s filing.