Dish May 'Weaponize' Ad-Zapper In Fee Fights

Washington, D.C. (June 8, 2012) -- Did Dish Network launch the ad-zapping Auto Hop to gain leverage in future carriage talks with the broadcast networks?

When the feature was launched last month, I wrote the following:

"Like other TV providers, Dish is concerned that the networks (ABC, CBS, NBC and Fox) are getting increasingly bold in seeking higher compensation for carriage of their channels. The satcaster could be planning to use Auto Hop as leverage in future negotiations.

It shouldn't surprise anyone if that happens. Dish Chairman Charlie Ergen is famous for playing hardball in high-level disputes and you could certainly see Ergen looking a network exec in the eye and saying, 'You drop the price for your network and I'll remove the Auto Hop feature from your network.' "

Well, Ergen himself has now confirmed that Auto Hop, which automatically eliminates network commercials during recorded playback on Dish's Hopper HD DVR, could be used as a weapon in future negotiations.

In an interview with The Wall Street Journal, published today, Ergen says:

"If the ad is skipped, the consumer likes it, but it's not necessarily good for me and it's not necessarily good for the broadcaster because I'm in the same ecosystem as him. So we have to figure out how the broadcaster benefits, we benefit and the consumer continues to feel like he gets a fair deal. So maybe [the consumer] pays a little bit less for 'retrans,' (the industry term for negotiations for new programming contracts) his bill doesn't go up by double digits every year.... That's an interesting conversation to have."

The networks and Dish are now suing each other over the new ad-zapper with a hearing expected in July.

While Ergen said Auto Hop is also intended to attract viewers who may be more inclined to watch video online, it appears he's ready to use it in the next network negotiation.

And in related news, Dish says the Dallas-based Hoak Media has pulled 14 stations in six markets from Dish airwaves partially due to Auto Hop. The satcaster says Hoak wants a fee increase and for Dish to discontinue the ad-zapper.
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Phillip Swann is president and publisher of TVPredictions.com. He has been quoted in dozens of publications and broadcast outlets, including CNN, Fox News, Inside Edition, The New York Times, The Washington Post, The Chicago Tribune, The Financial Times, The Associated Press and The Hollywood Reporter. He can be reached at swann@tvpredictions.com or at 703-505-3064.

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