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Dish, Gannett Hop Past Skirmish

Ad-Skipping Feature Doesn’t Hold Up Retrans Deal 10/14/2012 8:00 PM Eastern

Dish Network and Gannett Broadcasting managed to hammer out a retransmission-consent deal last week, despite the satellite-TV giant’s contention that the broadcaster was trying to squelch its controversial Auto Hop ad-skipping technology.

Terms of the deal were not disclosed. The agreement, reached a few hours after the formal midnight Oct. 7 deadline passed (both sides agreed to a brief extension as talks continued) kept Gannett stations in 19 markets, including Washington, D.C.; Atlanta; Denver; and Phoenix, Ariz., on Dish Network’s service.

In a terse statement issued Oct. 8, Gannett Broadcasting said it had reached an agreement, but declined further comment. Dish would only confirm the Gannett statement and also declined further comment.

That approach was a bit different than just a few days earlier, when Dish had issued statements accusing the broadcaster of demanding a 300% price increase — after Dish had offered to pay a 200% rate hike — and of requiring that it disable its Auto Hop feature or face severe penalties.

“Gannett is stifling innovation and crushing customer choice and control,” Dish senior vice president of programming Dave Shull said in a statement Oct. 5, two days before its contract with Gannett was set to expire. “That’s insulting to our subscribers and we won’t stand for it.”

According to sources close to the negotiations, Gannett didn’t demand the Auto Hop function be disabled, but it did want to be fairly compensated for any lost revenue resulting from Dish subscribers skipping through ads.

“The Hopper has economic implications,” one executive familiar with the talks said. “Certainly it is part of the business-model consideration of the deal.”

Whether they got that remains to be seen. But it does bring up the question of whether Auto Hop will become a sticking point in future retrans and carriage negotiations.

Dish launched Auto Hop in May as part of its Hopper whole-home digital video recorder. The feature allows customers who automatically record broadcast network shows via its PrimeTime Anytime feature to skip ads with the push of a button, provided they view the show at least one day after it originally airs. Live- TV ad-skipping is not available.

Pivotal Research Group principal and media and communications analyst Jeff Wlodarczak said that the Auto Hop won’t disappear from the conversation, but it may just be part of the overall efforts to keep rates, and therefore costs for consumers, down.

“Broadcasters at this point have a lot of power,” Wlodarczak said. “There appears to be a going market rate, so distributors make a lot of noise. Hopefully customers notice that this is why their bills are going up.”

Content providers’ consternation over Auto Hop is nothing new — a handful of broadcasters, including NBC, CBS and Fox, sued Dish in May, claiming Auto Hop violated their copyrights. Dish actually beat that trio to court, filing suit in New York a day earlier claiming broadcasters were trying to stifle innovation. Fox filed for a preliminary injunction in California in August to force Dish to disable the Auto Hop feature until the case is decided. A ruling is expected soon.

“It is a differentiating factor for Dish from a marketing perspective, so why not get out there and also make a lot of noise about it?” Wlodarczak said.

TAKEAWAY

The economic implications of Dish Network’s ad-skipping Auto Hop technology weren’t enough to derail a retransmission-consent pact with broadcaster Gannett.

September