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Dish Network Prevails in Ad-Skipping Appeal

Paul Ausick

Ever since Dish Network Corp. (DISH) introduced its ad-skipping technology called the “Hopper”, network TV operators have been seeking to kill the beast. No luck so far, though, as a federal appeals court upheld a lower court ruling telling the networks to go pound sand.

The suit was brought against Dish by Fox Broadcasting and Twentieth Century Fox Film Corp., now part of Twenty-First Century Fox Inc. (FOXA), since the split with News Corp. (NWSA). In rejecting the original request for an injunction against Dish, the court said that its is unlikely that Fox would suffer irreparable harm as a result of ad-skipping Hopper. The appeals court agreed.

This is the second major defeat for network broadcasters in the past few months. In April, a group of broadcasters including CBS Corp. (CBS), The Walt Disney Co. (DIS), which owns the ABC television network, and Comcast Corp. (CMCSA), which owns the NBC network, and others against Aereo Inc., which is backed by Barry Diller, the CEO of IAC/InteractiveCorp (IACI). Aereo made the news earlier this week because Cablevision Systems Corp. (CVC) plans to suggest Aereo as a replacement for CBS network programming to its 3 million New York City customers if the cable provider can’t reach a new retransmission deal with the network.

Fox still has a chance to get a ruling in its favor because today’s ruling only applies to injunctive relief. The issue of whether or not Dish violated the terms of its distribution deal with Fox has not yet been fully decided. The district court said Fox “has a good argument” that Dish’s PrimeTime Anytime service, which creates the ad-free programming that is available on the Hopper, is “similar” to time-delayed, interactive, or video-on-demand programming and is, therefore, expressly prohibited by the contract between Fox and Dish. Fox has not indicated whether or not it will pursue this issue, but having come this far it’s hard to believe the network won’t.

The battle for control of the living room continues and the only thing that could make it more entertaining would be if the prices for all this programming would fall. That, however, is not likely.