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DISH Sues Broadcasting Majors

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One of the leading satellite companies in the US, DISH Network Corporation (DISH) has filed a lawsuit against four major broadcasting companies Walt Disney Co.’s (DIS) ABC, CBS Corporation (CBS), News Corp. (NWSA) owned Fox network and Comcast Corp. (CMCSA)-owned NBC Universal seeking a declaratory judgment to make DISH’s recently launched Auto Hop technology acceptable among these broadcasting companies.

The new Primetime Anytime service offered by DISH through its Auto Hop technology to premium HD subscribers, allows users to skip commercials at the time of watching recorded TV-shows.

However, these broadcasting networks strongly responded to DISH’s action by filing a countersuit claiming that the company has breached the copyright law by customizing TV shows for their own commercial interest. These broadcasters also believe that if such practices are encouraged then they will suffer significantly in terms of losing advertisement revenue.

However, DISH Network believes that they have not infringed any copyright law as the new service is similar to the DVR service that provides flexible viewing of TV shows at their own preferred time. Moreover, skipping of advertisement is possible only during recorded programs and not at the time of live broadcast of the show, hence not violating any contract agreement with the broadcasters.

Nowadays it has been noticed that the advent of new innovative devices, which offers flexibility to viewers to watch their favorite TV shows anytime anywhere, has given way to a number of legal tussles between the broadcasters and cable and satellite distributors. Recently, Time Warner Cable Inc. (TWC) settled the long pending legal tussle with Viacom Inc. (VIAB) regarding the streaming of cable TV shows on iPad.

We believe that such incidents will keep coming up until government redefines or brings more clarity to the contract terms with the media and broadcasting networks.

Currently, DISH Networkhas a Zacks #3 Rank, implying a short-term Hold rating on the stock.

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