Fox, NBC, CBS Sue Dish Over Ad-Skipping DVR - Broadcasting & Cable

Fox, NBC, CBS Sue Dish Over Ad-Skipping DVR

Charges copyright infringement and breach of contract over 'bootleg' service
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Updated: 7:42 p.m. ET

Fox filed suit against Dish Network over its Hopper DVR,
which allows subscribers to skip all the commercials in broadcast shows when
viewed the next day or later.

"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. Their
wrongheaded decision requires us to take swift action in order to aggressively
defend the future of free, over-the-air television," Fox said in a statement.

Also Thursday, NBC Studios, Universal Network Television, Open 4 business Productions and NBCUniversal Media filed a federal lawsuit in U.S. District Court for the Central District of California against Dish Network Corporations and Dish Network, LLC.

The suit asks for a "preliminary and permanent injunctive relief against Defendants' unlawful scheme to profit from an unprecedented and unauthorized new system for violating Plaintiffs' copyrights in prime time network television programming."

The network also issued a statement on the lawsuit, noting that "NBC has filed suit against this unlawful service in order to keep over the air broadcast television a strong competitor. Advertising generates the revenue that makes it possible for local broadcast stations and national broadcast networks to pay for the creation of the news, sports and entertainment programming that are the hallmark of American broadcasting. Dish simply does not have the authority to tamper with the ads from broadcast replays on a wholesale basis for its own economic and commercial advantage."

CBS joined Fox and NBC late Thursday by filing its own lawsuit against Dish Network. "This service takes existing network content and modifies it in a manner that is unauthorized and illegal. We believe this is a clear violation of copyright law and we intend to stop it," CBS said in a statement.

Dish announced its Auto Hopper on May 10,
just before the upfronts, when TV networks sell most of their advertising for
next season. In its announcement, Dish said that "viewers love to skip
commercials" and that "with the Auto Hop capability of the Hopper, watching
your favorite shows commercial-free is easier than ever before."

Network executives reacted during the upfront, calling the
service everything from an insult to illegal.

Fox's suit, filed in U.S. District Court in the Central
District of California, charges copyright infringement and breach of contract.
Fox is seeking to enjoin Dish's auto-hop service and wants an award of
compensatory and statutory damages, costs and attorney's fees.

Fox charges that it and the other broadcasters license Dish
to retransmit primetime network programming as it is broadcast, and also has
agreed to license primetime broadcast programming to Dish for video-on-demand
service to customers under conditions including prohibiting fast forwarding
through commercials.

"Commercial advertising is vital to broadcast television, as
the robust choices and quality of primetime programming....are possible only
because they are supported by the advertising revenues generated from
television commercials," Fox says in its suit.

Fox said Dish, in violation of copyright laws and its
license agreement with Fox, "launched its own bootleg broadcast video-on-demand
service called PrimeTime Anytime that is available to top-tier Dish subscribers
who lease the Hopper set-top box from Dish."

According to the Fox lawsuit, PrimeTime Anytime "makes an
unauthorized copy of the entire primetime broadcast schedule for all four major
networks every night...to make matters worse, Dish operates its bootleg PrimeTime
Anytime service so that the copies it makes are viewable commercial free."

Fox adds: "This lawsuit is not about Dish enhancing consumer
choice. By stealing Fox's broadcast programming to create a bootleg
video-on-demand service that, if not enjoined, will ultimately destroy the
advertising-supported ecosystem that provides consumers with the choice to
enjoy free over-the-air, varied, high-quality primetime broadcast programming.

"Nor is this case about traditional DVRs used by consumers
to time-shift individual television programs that they select and record, which
Fox is not challenging," Fox adds.

Fox notes that its programming is available on a variety of
other authorized video-on-demand services.

"This puts the lie to Dish's claim that its unauthorized and
unlicensed video-on-demand service is somehow necessary to enhance 'consumer
choice," Fox says.

Dish Network did not immediately reply to a request for a
comment on the Fox suit.

In a report when the service was introduced, Sanford C.
Bernstein & Co. analyst Craig Moffett noted that "Auto Hop adds to an
already long list of broadcast-unfriendly features of Dish's service, including
30-second skip buttons on their remote controls."

Moffett notes that other DVR services, including DirecTV and
TiVo, have locked this feature out of sight, while Dish boldly
promotes it on a button on the remote. Dish also offers Slingbox, which
bypasses incremental payment to affiliate fees for out-of-home viewing.

Moffett wonders if the networks will take legal action
against Dish. Even without legal action, he says it's likely that the
broadcasters will seek much larger retransmission payments from Dish in the
future, and notes that most of those broadcast networks are also owned by media
companies that control cable programmers as well.

"They can't be thrilled either. Indeed, although for now
Auto Hop seems to be confined to primetime broadcast, it conceivably could
spread to all programs/networks/dayparts," he said.

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