Bloomberg News

Fox Seeks Ban on Dish’s Ad-Skip Feature Pending U.S. Trial

August 26, 2012

Fox Broadcasting Co., a unit of Rupert Murdoch’s News Corp. (NWSA:US), sought a preliminary court ban against Dish Network Corp.’s feature that let consumers skip commercials, saying it would lose revenue otherwise.

Fox, in an Aug. 22 filing in Los Angeles federal court, also sought to stop Dish from offering a function that records all prime-time shows on the four major U.S. networks and saves them for as long as eight days.

TV networks including Fox, CBS Corp. (CBS:US) and Comcast Corp. (CMCSA:US)’s NBC sued Dish in May, claiming its new AutoHop digital video- recording feature, which allows viewers to automatically skip through commercials on recorded programs, infringes their copyrights and breaches Dish’s contracts.

The services by Dish, the third-largest U.S. pay-TV company, and possibly by competitors, would lead to a “massive reduction” of viewers for network television, prompting advertisers to pay less or stop buying commercials altogether, Fox said.

“PrimeTime Anytime and AutoHop cut the legs out from under the advertiser-supported broadcast television model,” Richard Stone, an attorney at Jenner & Block LLP, representing Fox, wrote in the filing seeking a ban on the services before a trial. “Fewer viewers will see the commercials during Fox programs and the amount advertisers will be willing to pay for commercials inevitably will fall.”

Credit Implications

Dish’s new service might affect the television networks’ ability to borrow money, with AutoHop having “broad negative credit implications across the television industry,” Neil Begley, an analyst for Moody’s Investors Service, said in a May 25 report cited by Fox in its filing.

U.S. District Judge Laura Taylor Swain in Manhattan ruled July 10 that the copyright-infringement lawsuits will be tried in Los Angeles, where the three major TV networks sued. Breach of contract claims between Dish and the networks will be heard in New York, she said.

Dish sued in New York less than 24 hours after The Hollywood Reporter published an article, citing unidentified people stating that the networks were planning to sue.

The networks are trying to stifle innovation, Dish said in its complaint. AutoHop “complies with Dish’s bargained-for contractual rights,” it said. Dish said it pays the networks “hundreds of millions of dollars per year in retransmission fees, collected from its subscriber base, for the right to rebroadcast these signals.”

Comcast, also a cable operator, and DirecTV (DTV:US), a satellite TV company, are the largest U.S. pay-TV providers.

The networks’ cases are Fox Broadcasting v. Dish Network LLC, 12-4529; NBC Studios LLC v. Dish Network Corp. (DISH:US), 12-4536; and CBS Broadcasting Inc. v. Dish Network Corp., 12-4551, U.S. District Court, Central District of California (Los Angeles). The Dish case is Dish Network LLC v. American Broadcasting Cos., 12-04155, U.S. District Court, Southern District of New York (Manhattan).

To contact the reporter on this story: Joe Schneider in Sydney at jschneider5@bloomberg.net

To contact the editors responsible for this story: Douglas Wong at dwong19@bloomberg.net; Michael Hytha at mhytha@bloomberg.net


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Companies Mentioned

  • NWSA
    (News Corp)
    • $18.13 USD
    • -0.09
    • -0.5%
  • CBS
    (CBS Corp)
    • $60.43 USD
    • -1.07
    • -1.77%
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