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Disney CEO: Dish Undermining Own Business With Ad-Skipping DVR

30 May, 2012 By: Erik Gruenwedel

The Walt Disney Co. CEO Bob Iger said Dish Network’s rollout of a DVR enabling subscribers to skip advertising on recorded television programs is harmful to both the media company’s ABC TV subsidiary as well as the satellite TV operator’s subscriber-based business model.

Speaking May 30 at the Sanford Bernstein Strategic Decisions conference in New York, Iger said advertising is the lifeblood that fuels the production of primetime programming for which cable and satellite TV subscribers are paying. He said that by allowing subs to circumvent ads, Dish is endangering an ecosystem from which it benefits.

Dish earlier this month began marketing an “Auto Hop” feature on its Hopper-branded DVR that enables subscribers to voluntarily skip ads on high-definition recorded primetime network programming (but not cable programming). The technology does not allow users to skip ads during the actual live broadcast.

Media company executives were quick to denounce Auto Hop, while Fox Television and CBS separately filed lawsuits against it last week. Dish, in turn, filed suit against the networks, including NBC and ABC, for not running TV spots advertising the technology, which it claims has been the backbone of DVR use for years.

“Feels like a ‘bite the hand that feeds you’ approach in my opinion because the quality of the programming that we make, which is relying on various forms of revenue, including advertising, is important to them,” Iger told conference attendees. “By attacking the revenue model and business model, one has to question in the end what, ultimately, if they’re successful, it does to the ability to invest in that product.”

Iger said undermining the traditional advertising business model would harm Dish’s ability to generate incremental revenue and lure or retain subscribers in the long term.

“They don’t seem to care about that,” he said. “I’m confident in our position legally.”

Richard Greenfield, analyst with BTIG Research in New York, questions the media companies' concerns on Auto Hop. He said Fox and CBS have never raised legal concerns in the past regarding DVRs that enable users to time-shift programming and skip ads.

"We find it challenging to assert that it is okay to have a DVR record from 8-11 on a given day and for a DVR to always record 'American Idol' or 'The Voice,' but that it is illegal to write code/script that combines the two concepts together to perpetually record a block of programming using multiple tuners," Greenfield wrote in a May 25 blog. "Auto Hop is not removing the commercials; it is simply skipping the commercial blocks rather than having to hit the 30-second skip feature 5 times quickly or hold down the fast-forward button."

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