Dish wants AutoHop trial in New York, snubs politicians

The latest episode in the controversy over Dish Network’s ad-skipping AutoHop feature is the company’s request that the lawsuits over its service be heard in New York, rather than Los Angeles. In May, TV broadcasters CBS, NBC and Fox sued Dish, the number three Pay TV operator in the U.S., claiming copyright infringement and breaches in Dish’s contracts with them.

As reported by Bloomberg, Dish might prefer Manhattan to LA because of a 2008 appeals court ruling that allowed Pay TV operators to offer digital video recording (DVR) services without being held liable for copyright infringement. On Tuesday, U.S. District Judge Laura Taylor Swain said she would rule on where the cases will be heard “within a week.”

Part of Dish’s HD-DVR PrimeTime Anytime service, AutoHop has become a flashpoint of controversy. In January at CES 2012, Dish unveiled PrimeTime Anytime, which automatically records the evening lineup of the four major broadcasters, to loud acclaim. In May, it launched AutoHop, and the fireworks began. Dish claims that the ad-skipping technology is in compliance with its retransmission agreements. The broadcasters want it shut down.

Dish is not averse to rattling cages. In a Capitol Hill hearing on the “future of video” on June 27, its colorful chairman Charlie Ergen noted an additional benefit of AutoHop, highlighted in thisHollywood Reporter article: it could shield children from commercials for junk food and alcohol.

Ergen tweaked political noses further in a colloquy with Rep John Dingell (D, Michigan), who asked whether Ergen understood and appreciated the concerns of “politicians everywhere” about a technology that could limit their ability to reach constituents (aka voters) via television ads. “I understand consumers very well,” Ergen responded. “I’m not a politician, so I can’t tell you I appreciate their concerns.”

However the dispute between Dish and the broadcasters is resolved, DVR-based ad skipping—automatically enabled or not—is here to stay. Moreover, it is changing the way that advertisers and investors analyze their business.

A recent note by Bernstein Research Senior Analyst Todd Juenger (which included the Ergen-Dingell exchange) highlighted the rise of a consumer segment deemed “The Unreachables.” These are consumers who strongly avoid commercials, yet are highly sought after by marketers. “The best current proxy for identifying the Unreachables is presence of a DVR,” Juenger writes. Add to DVRs the growth of whole-home DVR services, Netflix, premium cable network growth, iPads and laptop viewing, and he figures that available video ad impressions against the Unreachables drops by 50%.

Given the scarcity of TV inventory reaching this group, Juenger speculates that advertisers may go to “clever and intrusive lengths,” perhaps via the Internet or even print media or outdoor advertising, to reach this elusive segment.