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Three of the four major TV networks have sued Dish Network for copyright infringement.

There's just one catch -- Dish hasn't copied a thing. Rather, the satellite service provider has gotten into trouble for giving consumers an easy way to skip commercials.

From a business standpoint, Dish's (NASDAQ: DISH) new feature -- a set-top box known as the "Hopper" -- is quite brilliant. Promoted on the company's website as a device that lets you "get instant On Demand access to your favorite primetime shows for 8 days," the Hopper also allows viewers to automatically skip commercials in primetime TV from ABC, CBS, Fox and NBC.

Of course, there is a catch, as Dish says that its commercial-free TV features are "Only available with playback of select shows."

Playback, as in after the fact, meaning that anyone who watches primetime TV live will still be subject to eight to ten minutes of commercials for every 30-minute sitcom, and 16 to 18 minutes of commercials for every 60-minute drama. Those who choose to DVR or video record the shows can surely skip the commercials if they want, but they can't do so in real-time.

With that in mind, you might think that the TV networks would just shut up and let Dish sell its new feature. After all -- if Dish is successful, it means people are still watching TV. As long as they're still watching, everybody wins. (If networks want us to watch new content as it airs, they simply need to produce better-quality shows.)

Nonetheless, CBS (NYSE: CBS) did not see it that way. Comcast (NASDAQ: CMCSA), the proud new owner of the cancellation network (also known as NBC), does not see it that way either. Fox, the News Corp.-owned (NASDAQ: NWSA) primetime channel, is also blind on the matter.

Consequently, the three networks are suing Dish over the Hopper and its commercial-skipping feature.

According to Bloomberg, Fox claims that Dish created a "bootleg" video-on-demand service that could "destroy the advertising- supported ecosystem that provides consumers with the choice to enjoy free over-the-air" TV. Fox made those statements in a complaint filed yesterday in federal court in Los Angeles. NBC and CBS chose to sue Dish separately.

In addition to being accused of copyright infringement, all three networks are seeking unspecified damages and a court order that would prevent "unauthorized distribution" of their programs. Fox is taking this one step further, claiming that Dish breached its contract with the network.

Bloomberg quoted a Fox spokesman, Scott Grogin, as saying, "We were given no choice but to file suit against one of our largest distributors, Dish Network, because of their surprising move to market a product with the clear goal of violating copyrights and destroying the fundamental underpinnings of the broadcast television ecosystem."

David Shull, Dish's SVP of programming, defended the company's right to offer a product that allows users to skip commercials. "Consumers should be able to fairly choose for themselves what they do and do not want to watch," he said in a statement to Bloomberg. "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."

Dish filed a complaint of its own yesterday against all four TV networks -- CBS, Fox, NBC, and the Disney-owned (NYSE: DIS) ABC, the only major network that has not taken action against Dish -- seeking a court ruling that it has not infringed on any copyrights.

At press time, ABC had not responded to Benzinga's request for comment.

Who's Right? Who's Wrong? Who Will Lose?

This is a touchy subject, to be sure. We now live in a world where consumers can watch TV online with limited commercial interruption. The shows are limited to playbacks -- Hulu and Netflix (NASDAQ: NFLX) are not real-time platforms -- so you can't watch live TV this way. But some consumers are more than happy to wait. And that terrifies the TV industry.

Networks have been trying to monetize streaming video for more than a decade. Only now (with the success of Hulu) are they beginning to realize that monetization does not have to be that different from the existing TV format. The problem is that TV networks want to have their cake and eat it, too.

Thus, Comcast recently added commercial-forced viewing to its on-demand offerings from Fox, ABC and NBC. Whereas Comcast digital cable subscribers could once skip forward to any part in the show (bypassing commercials if they choose), that feature has now been eliminated for those three networks. Viewers can, however, still fast forward while watching CBS shows on demand.

If Fox doesn't like the idea of viewers skipping commercials while watching TV on-demand, it's no surprise that the network is so unhappy with Dish right now. Still, I can't help but think that this is an extreme reaction to a rather minor problem. Instead of working with Dish on the matter, Fox went straight to court. Considering how important Dish is to the future of Fox, the network might have jumped the gun.

That's not to say that Dish is completely innocent. It might very well be guilty of breaching its contract with Fox. In that case, the satellite provider could be in trouble.

Regardless, the biggest loser in all of this will surely be the consumer, who will have to endure higher prices and fewer options as content distributors -- cable, satellite, or online streaming -- use every excuse in the world to raise their rates.

Follow me @LouisBedigianBZ

Posted-In: ABC Bloomberg CBS Comcast dishNews Legal Tech

 

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