Dish Network and Disney Reach Retrans Deal Over Ad-Skipping Hopper

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Dish Networks CEO Joe Clayton

UPDATED: Under the new agreement, the satellite service's commercial-avoiding DVR will be disabled on ABC and ESPN shows until three days after broadcast -- the period when the networks sell advertising.

After more than six months of negotiations, a legal battle and acrimonious public comments, the Dish Network and the Walt Disney Company have come to a far-reaching retransmission consent agreement, the two companies announced Monday. 

The key element of the plan, which was finalized Sunday, calls for the national satellite service to alter its ad-skipping Hopper feature so that it won’t work on ABC, ESPN and other Disney network shows until three days after a show airs. That time period is crucial because ratings for up to three days (live plus recording) are the basis on which advertisers buy and pay for time on the networks.

That technology is at the heart of a heated legal battle involving not just Disney/ABC, but also CBS, Fox and NBC. Last September, as these continued negotiations on carriage were heating up, a federal judge in New York denied a request by ABC to stop Dish from even selling devices with the Hopper feature. The last Dish-ABC carriage agreement expired at the end of September but the two sides agreed to a series of extensions, which has kept the Disney networks on the satellite service.

"The agreement will result in dismissal of all pending litigation between the two companies, including disputes over PrimeTime Anytime and AutoHop," according to the announcement. "As part of the accord, Dish will disable AutoHop functionality for ABC content within the C3 ratings window. The deal also provides a structure for other advertising models as the market evolves, including dynamic ad insertion, advertising on mobile devices and extended advertising measurement periods."

It has been clear for months that the battle was not over how much Dish would pay, but rather over digital rights -- what has been billed as “a battle over the future.” Now the two sides have found a compromise.

It is likely in coming negotiations that other networks will now look to cut similar deals.

The new agreement covers carriage of all the ABC-owned broadcast stations, ABC Family, Disney Channel, ESPN and ESPN2, as part of an Internet delivered, IP-based multi-channel offering.

For the first time, DISH customers will be able to access Disney’s live and video-on-demand products, including WatchESPN, WATCH Disney, WATCH ABC Family and WATCH ABC using Internet devices in the home and elsewhere.

It also covers new Disney networks. Those include Fusion (a joint venture with Univision), which programs news and other programming for the millennial generation; the SEC Network, a channel ESPN plans to launch later this year, which will carry sports events from the Southeast Conference, which is a football powerhouse most years; Disney Junior; the Longhorn Network; and ESPN 3.

In addition, DISH, ESPN and ESPN Deportes subscribers will get access to the live and video-on-demand channel ESPN3, and DISH will launch ESPNEWS, ESPNU, Disney Channel and ABC Family in high definition. ESPN Classic will be reintroduced as a video-on-demand channel.

There were no financial terms announced. 

“The creation of this agreement has really been about predicting the future of television with a visionary and forward-leaning partner,” said Joseph P. Clayton, Dish CEO and president. “Not only will the exceptional Disney, ABC, ESPN entertainment portfolio continue to delight our customers today, but we have a model from which to deliver exciting new services tomorrow.”

Anne Sweeney, co-chair Disney Media Networks, and president, Disney/ABC Television Group, said, “We knew early on we had a responsibility with this deal to not only do what was best for our business, but to also position our industry for future growth. After months of hard work and out-of-the box thinking on both sides, led by Bob Iger and Charlie Ergen, this agreement, one of the most complex and comprehensive we’ve ever undertaken, achieves just that. Not only were innovative business solutions reached on complicated current issues, we also planned for the evolution of our industry."

Dish, under CEO Ergen, has been extremely aggressive about innovating new modes of distribution. Ergen also has talked to analysts about creating his own over-the-top service, which would allow direct access to consumers, not unlike what Netflix has done and what WWE recently did when it launched a digital channel.

There was a report Monday by Broadcasting & Cable that Dish has beaten out 22 other bidders to acquire an additional block of wireless spectrum, known as the H block, which is being auctioned off by the federal government and is valued at more than $1.5 billion. There has been speculation Dish could use its wireless capacity to launch a new content service or to enter the wireless phone field.

Dish also could get a jump on arch competitor DirecTV by offering a package of satellite and wireless services that includes video, broadband and phone, helping it better compete with cable companies like Comcast -- which is in the process of acquiring Time Warner Cable.