The Networks May Need to Dump Dish
By Swanni
Washington, D.C. (September 19, 2013) - This is an update on earlier coverage of the networks' lawsuit against Dish over its ad-skipping Hopper HD DVR.
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A federal judge yesterday rejected ABC's request for a preliminary injunction to force Dish to shut down its ad-skipping Hopper HD DVR.
This marks the third time that a federal court has ruled against a broadcast network attempting to halt Dish from selling the device which can automatically skip commercials during recorded network prime time programs.
The networks say the HD DVR violates their copyrights because it removes the commercials without their permission. Dish maintains that the Hopper is just a better version of the traditional HD DVR because it skips the ads without the viewer needing to pick up a remote to perform the same task.
While ABC issued a statement saying the legal fight is not over, the networks' third loss in federal court could force them to adopt a new strategy. The federal judge yesterday appeared to leave open the door for the networks to claim Dish has violated their carriage agreements and thereby can no longer carry the signals of their owned and operated affiliates.
This could be a risky gambit because Dish reaches more than 14 million subscribers. Not having some of their affiliates in Dish's lineup would hurt the networks' ratings -- and, consequently, their ad revenue, the very thing they are trying to protect by targeting the Hopper.
The ratings' drop would be softened somewhat because the networks own only about 20-30 percent of all local network-affiliated stations; the rest are owned by independent companies. So, in reality, all four broadcast networks would lose less than 50 percent of Dish's 14 million subscribers if they chose this path. (The percentage of viewers lost would be higher than the percentage of stations owned because many of the networks' owned affiliates are in larger markets.)
However, demanding Dish dump its affiliates may be the only way to go unless something changes in the federal courts -- and after three losses, that's looking less likely. By denying Dish the signals of the affiliates they own, the satcaster's sub base could be severely damaged.
And that could force Dish to seek a compromise in the Hopper dispute.
Of course there are complications to this strategy as well: Dish could try to partner with the local TV channel provider, Aereo, which is also being sued by the networks. Or it could hand out free antennas to everyone. And there's no certainty that the courts would side with the networks if they attempt to unspool their carriage agreements with Dish.
One more complicating factor: Dish's victory over ABC comes less than two weeks from when the satcaster's carriage agreement with Disney expires. The ruling could further poison the already contentious negotiations, leading to a blackout of Disney, ESPN and the ABC affiliates on Dish.
You have to say this: Dish Chairman Charlie Ergen, who decided to launch the controversial Hopper, knows how to make things interesting.[/FONT]