Dish Loses Bid to Dismiss Ad-Skipping Case

Satellite TV provider Dish Network DISH is the subject of a lawsuit from broadcast networks over a new feature that allows consumers to skip advertisements. According to the Christian Science Monitor on July 3, the CBS CBS, NBC and Fox networks are suing Dish over the new AutoHop feature, which blacks out ads when a program is saved onto digital recorders. With AutoHop, the screen turns dark when a commercial starts, then the program returns a few seconds later. Unsurprisingly, the networks are not happy as advertising accounts for such a huge chunk of TV revenue. However, with this technology only applying to recorded shows, Dish chairman Charlie Ergen does not feel like his company has a case to answer. "I think it was settled 28 years ago in the Betamax case,” Ergen said to Congress last week, referring to the 1984 case that ruled consumers were not violating copyright laws by recording shows and then fast-forwarding through the advertisements. At the end of May, Benzinga published a story stating that very thing, saying that, "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." The broadcast networks don't agree. Neither does the federal judge in New York, Judge Laura Taylor Swain, who ruled Tuesday that the lawsuits will be tried in Los Angeles. According to Bloomberg, Swain said, "Dish's filing was motivated by a fear of imminent legal action by the networks and was, thus, improperly anticipatory." Meanwhile, Dish's general council R. Stanton Dodge said in a statement, "Regardless of the venue, we look forward to proceeding with this case. Dish will stand behind consumers and their right to skip commercials, something they have been doing since the invention of the remote control.” It is only natural for the broadcast networks to be nervous about a new feature that makes it so easy to skip advertisements. Even when fast-forwarding through ads, consumers take in some of the intended message. Sometimes, viewers simply forget to fast-forward at all. But if no work is required, then one must wonder what the long-term implications for TV advertising will be. Shares of Dish were trading at $27.59 at the time of posting, down 2.37 percent from Monday's market close. Follow me @BCallwood.