Dish Network’s AutoHop ad-skipping feature sparks lawsuits

Fox Broadcasting, NBCUniversal and CBS Corp. have sued Dish Network to try to sink the satellite company’s controversial new ad-skipping feature AutoHop, which makes it possible for subscribers to automatically remove commercials in broadcast TV shows.

Dish fired back with its own lawsuit, asking a federal judge to declare that AutoHop violates no laws. Dish sued Fox, NBC, CBS and ABC, which is expected to join the other broadcast networks in the effort against the satellite TV company.

The television industry has been grappling with new technologies that threaten to undercut the billions of dollars a year that networks collect from advertisers for 30-second commercial spots.

Pay TV subscribers with digital video recorders for years have had the ability to fast-forward through commercials of recorded shows. But with the AutoHop feature, introduced May 10, Dish customers can record all of the prime-time TV programming on ABC, CBS, FOX and NBC for later viewing. Then, when a commercial break appears, the screen goes black. Seconds later, the program returns — minus the ads.

The networks said that aggressive action was needed to protect the TV industry’s long-established economics. The $19 billion a year in advertising revenue collected by the broadcast networks helps underwrite the cost of producing television shows.

“We were given no choice but to file suit against one of our largest distributors, DISH Network, because of their surprising move to market a product with the clear goal of violating copyrights and destroying the fundamental underpinnings of the broadcast television ecosystem,” Fox said in a statement.

Fox, NBC and CBS filed their suits against Dish on Thursday in U.S. District Court in Los Angeles. Dish filed its suit the same day in U.S. District Court in New York.

Dish Network has 14 million subscribers, although not all of its customers have access to AutoHop. The networks believe the feature could seriously hamper their ability to charge premiums for their commercial time.

The roll-out of the new feature came at a particularly awkward time for broadcasters, just as they were beginning negotiations with advertisers over the sale of commercial time for the 2012-13 TV season.

Dish’s “suit asks for a declaratory judgment that the AutoHop feature does not infringe any copyrights … and that DISH, while providing the AutoHop feature, remains in compliance with its agreements with the networks,” Englewood, Co.-based Dish said in a statement.

Dish said its new technology was simply making it easier for consumers to avoid commercials.

“Viewers have been skipping commercials since the advent of the remote control; we are giving them a feature they want and that gives them more control,” David Shull, Dish senior vice president of programming, said in a statement. “We don’t believe AutoHop will substantially change established consumer behavior.”

Fox, in its lawsuit, said that it licenses Dish to retransmit the prime-time network programming that airs on broadcast TV stations across the country. But there are certain conditions attached, “including prohibiting fast forwarding through commercials,” Fox said.

Fox accused Dish of “stealing Fox’s broadcast programming to create a bootleg video-on-demand service for all network prime-time programming.”

“This is not about Dish enhancing consumer choice,” Fox said in the suit.

The AutoHop feature is offered for use only on prime-time broadcast programming and not cable programming, and cannot be used for certain “live” broadcast shows, such as sports events.

Commercials aren’t the only issue for Dish. In an interview, Shull said the satellite broadcaster was concerned about the way networks are putting more of their content on digital platforms such as Hulu and iTunes.

“It devalues the content,” Shull said. Since the content is now ubiquitous, he added, Dish wants to offer its customers different perks, such as being able to see recorded shows commercial-free.

But, for the networks, Dish’s concerns provided little justification for upsetting their businesses.

“Advertising generates the revenue that makes it possible for local broadcast stations and national broadcast networks to pay for the creation of the news, sports and entertainment programming that are the hallmark of American broadcasting,” NBCUniversal said in a statement. “Dish simply does not have the authority to tamper with the ads from broadcast replays on a wholesale basis for its own economic and commercial advantage.”