Despite broadcasters complaints and litigation, Dish Networks (NASDAQ:DISH) will continue to offer ad-skipping technology with its digital video recording (DVR) boxes, the company’s reclusive chairman told Bloomberg.
The ad-skipping service, called Auto-Hop, debuted last month to angry objections from CBS (NYSE:CBS), News Corp.’s (NASDAQ:NWSA) Fox and Comcast’s (NASDAQ:CMCSA) NBC. The service allows subscribers to omit commercials when viewing recorded episodes of network programs.
Infuriated by the services, which Dish is advertising as part of its “Hopper” set-top DVR box, the broadcasters sued the satellite TV provider. Dish counter-sued, asking the court to rule that the service is legal.
Dish Chairman Charlie Ergen says that the ad-skipping service is “competitive necessary” and accused the broadcasters of damaging their own ad-supported business models by offering their shows on websites like Hulu with fewer ads than when broadcast.
Warning that broadcasters faced a critical challenge from the Internet, Ergen pointed out that four of his five children have dropped subscription television services in their own homes in favor of online video-streaming. He also said the ad-skipping service should compel the broadcasters to find a better way of targeting their advertising.
A former professional gambler, Ergen has clashed with broadcasters before over “retransmission” fees paid to transmit broadcast network programming over Dish’s service.
Bloomberg noted that some broadcasters believe that Dish is promoting the ad-skipping service to influence those negotiations. Ergen admitted that the service might change the balance between consumers, broadcasters and networks like Dish, potentially lower re-transmission fees.