9:01am PT by Eriq Gardner
Fox, Dish Agree to Pause Litigation Over Ad-Skipping DVR (Exclusive)
With about a month to go until a trial, Fox Broadcasting and Dish Network have requested that a California federal judge pause litigation over the controversial ad-skipping DVR service known as AutoHop or the Hopper until late October, when a retransmission consent agreement between the parties is set to expire.
In a court document filed on Thursday, the parties say that they believe "it is highly likely that the negotiation later this year of a renewal of their 2010 agreement will result in resolution of this lawsuit."
The agreement to stay the case marks a huge turnabout for the companies controlled by Rupert Murdoch and Charlie Ergen, who once explored a business relationship with each other only to spend the last decade brawling with each other in courts and at regulatory agencies in spectacular fashion. The AutoHop lawsuit was filed in May 2012 and alleged copyright infringement and breach of contract over a service that the broadcaster compared to an unlicensed video-on-demand service. The lawsuit was amended in February 2013 to incorporate Dish's place-shifting technology from Sling Media, which allows consumers to watch television content away from their homes on computers and mobile devices. Dish has insisted that its technologies make fair use of copyrights and has successfully fended off requested injunctions all the way up to the 9th Circuit Court of Appeals.
Just ten days ago, Fox and Dish reported to the judge that a mediation session had failed to produce a settlement.
But on Thursday, the two sides publicly announced a deal that restored Fox News to Dish's satellite service. Fox News got a bump in subscriber payments, according to sources, but the deal might have yielded an even greater breakthrough between the contentious companies. Fox and Dish are apparently now optimistic about ending a bitter legal fight that had the potential of shaping copyright law and the development of technologies bringing more on-demand programming.
The agreement to pause the case comes days after a judge's secret ruling.
On Monday, in Fox's lawsuit over the AutoHop, U.S. District Judge Dolly Gee issued a summary judgment in the case. It's under seal, and in agreeing to pause the lawsuit, both sides have asked the judge to keep it secret for now lest it "impair the parties' ability to reach a resolution of the case."
If the two sides are able to ultimately use retrans negotiations to settle the AutoHop litigation, they will be following in the footsteps of Disney, which did the same in March 2014, and CBS, which made its own deal with Dish last month.
The various lawsuits brought by broadcasters against Dish have occurred amidst another high-profile battle against Aereo, which went up to the Supreme Court and informed the debate over place-shifting technology and probably influenced negotiations over the digital distribution of television content. Perhaps most notably, Dish earlier this month announced that it had licensed Disney's ESPN for an over-the-top service that costs $20 a month.
Dish has made other deals for its digital service, and those pacts had the potential of being brought forward at a Fox-Dish trial that was scheduled for February 24.
In fact, Dish's streaming deals have caused some nuisance already. On January 2, Fox began squaring off with NBC over whether the latter's streaming deal with Dish needed to be produced in the AutoHop case.
"When DISH opposed Fox’s 2013 preliminary injunction motion, DISH argued that its unauthorized streaming of Fox programming over the Internet did not harm Fox because there isn’t a market for streaming television programs over the Internet," wrote Fox's attorneys to Judge Gee. "It turns out that DISH has been licensing Internet streaming rights from other television networks. Those license agreements prove that an Internet streaming market exists. The terms of those agreements may also serve as benchmarks for the calculation of reasonable royalty damages..."
A deal to pause the Fox-Dish litigation probably means that the NBC-Dish deal won't be coming to light anytime soon.
Oddly, NBC is still involved in its own lawsuit against Dish over AutoHop. That litigation has been delayed pending the resolution of appeals in Fox's lawsuit. To make matters even more complicated, Dish has been speaking up at the FCC in the agency's ongoing review of the merger between NBC parent Comcast and Time Warner Cable. On Monday, Dish filed a letter at the FCC describing a meeting where the satcaster argued that Comcast-TWC would have a greater incentive to foreclose online video distributors from access to its programming. Dish told the FCC, "In fact, DISH already has experienced difficulties in obtaining certain OTT rights from third-party programmers, possibly because of restrictive contractual limitations imposed by Comcast on such programmers."
Although neither Fox nor Dish have told the court what makes them optimistic about reaching a deal, expect streaming rights to be part of the negotiation.