Dish vs. TV Networks: Attorneys Readying Showdown Over Auto Hop

This story first appeared in the June 1 issue of The Hollywood Reporter magazine.

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Attorneys are lining up to represent TV broadcasters in what most believe is an inevitable legal showdown with Dish Network over Auto Hop, the satellite provider's new device that lets subscribers watch programming without commercials.

Sources tell THR that the parent companies of the four major broadcast networks -- Fox Broadcasting, NBCUniversal, ABC/Disney Television Group and CBS Corp. -- have begun consulting with major law firms with the expectation that litigation will be filed against Dish.

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If so, it would be the first major legal challenge to ad-skipping technology since Hollywood declared war on early DVR pioneer ReplayTV in 2001. That company's owner declared bankruptcy two years after being sued, so the copyright case was dropped, and no major DVR provider has since crossed the line from fast-forwarding to outright skipping -- until Dish CEO Charlie Ergen, 59, revealed Auto Hop to his 14 million customers in early May without telling content providers in advance.

"They gave no warning and introduced a product that is totally inappropriate," fumes one network exec. Hollywood legal execs immediately began talking to one another, as moguls made their thoughts known during the TV upfronts. "I think this is an attack on our ecosystem," NBC Broadcasting chairman Ted Harbert said May 14.

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The networks are said to be examining their Dish license agreements, looking for breaches of contract that can be alleged along with claims for copyright infringement. One top exec said a lawsuit should be expected within a month. (The industry already is fighting the Barry Diller-backed Aereo, which streams TV broadcasts online.)

In the meantime, Fox and NBC have pulled ads for Auto Hop from their networks, and Discovery CEO David Zaslav suggested on a panel May 21 that Dish will need to raise prices to compensate networks for lost ad revenue: "If there isn't going to be advertising, then there needs to be a lot higher subscriber fees."