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Did Dish's Ad-Zapping Gamble Pay Off With Disney?
Washington, D.C. (March 3, 2014) - Dish and Disney have reached a new carriage agreement and it calls for the satcaster to modify the ad-zapping feature on its Hopper HD DVR when subscribers are watching recorded prime time ABC shows, the Wall Street Journal reports.
ABC had sued Dish over the feature, called Auto Hop, because it can automatically skip commercials during the recorded playback of prime time shows on ABC, CBS. NBC and Fox. (The subscriber must perform a one-time setting of the HD DVR to automatically skip the ads.)
Disney, and its broadcast network colleagues, which are also suing Dish, have been saying Auto Hop infringes on their copyrights and violates their carriage agreements. They are concerned that Dish's subscribers won't see their ads.
WSJ reports that Dish and Disney, which have been negotiating a new carriage deal since last summer, have reached an agreement permitting Dish to continue carrying Disney-owned ABC, ESPN and Disney channels (and add the Disney-owned Longhorn Network and August-launching SEC Network.). But it requires Dish to modify Auto Hop during ABC shows. Now, subscribers will not be able to use Auto Hop while watching the ABC programs until three days after their airing. (Disney will drop its lawsuit as part of the agreement.)
Some analysts are saying Dish caved. But it says here that Dish likely used the Auto Hop feature as leverage to exact better terms from Disney in the carriage deal. The satcaster, like other TV providers, have desperately been looking for ways to reduce programming costs and Dish Chairman Charlie Ergen would certainly be willing to modify Auto Hop to get a better deal.
That scenario, which I predicted would happen in May of 2012, seems likely considering that Dish was winning the early court battles over Auto Hop. Why would Ergen give up Auto Hop if he didn't have to -- unless he was getting something back from Disney in the carriage deal.
In fact, I wrote the following on May 11, 2012:
"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."
In addition to possibly reducing Disney's carriage fee demands, Dish says tonight in a press release that it has obtained the rights to programming from Disney's Net-based programming, such as WatchESPN -- and the rights to ABC channels and on-demand content for "an Internet delivered, IP-based multichannel offering."
Dish has hinted in the past that it might launch a Net-based TV service that would be a companion to its satellite service. The Disney deal could help move that along.
There's no guarantee that Dish will ultimately launch the Net TV service, but the Disney deal could become historic if it does. By offering its service over the Net, Dish could reach customers who now can't subscribe because they can't install a dish on their property for one reason or another. Consequently, an Internet offering could give Dish access to millions of people they otherwise could never sign up.
When you consider that -- and the possibility that Dish got a break in carriage fees -- who cares if people have to wait three days after a show's airing to automatically skip ads. I guarantee you that Dish doesn't care.
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