Policy & Law
According to a new claim from CBS, Dish withheld that it was working on its commercial-skipping Auto Hop feature during its contract negotiation with the network, which CBS says "fundamentally altered the basic economics" of the deal. It contends that had it known about the feature and its resulting effect on advertising revenue, it never would have signed the agreement. The Hollywood Reporter reveals that CBS is seeking permission to file new counterclaims for the allegedly fraudulent concealment of Auto Hop, asking for either damages or for the original agreement to be rescinded.
One of the material benefits CBS would get is the advertising revenue from the commercials it broadcasts
Broadcasters get a choice about the terms that govern how their programming is carried by cable services: thanks to a 1997 Supreme Court decision, cable TV providers are legally required to carry broadcast network programming, albeit without licensing fees. If broadcasters want cash from the deal, they can instead opt to strike a retransmission agreement with the cable provider itself. CBS says it was during negotiations for a retransmission agreement in late 2011 that the concealment took place. In its motion, CBS stresses that the two parties negotiated under the understanding that one of the material benefits CBS would get is the advertising revenue from the commercials it broadcasts.
Dish originally planned to release the Hopper in February with Auto Hop included
Before CBS and others sued Dish in May of 2012, Auto Hop was set to skip commercials on CBS’s pre-recorded programming automatically by default when viewed as part of Dish’s PrimeTime Anytime service. During discovery for CBS's current legal action, it was revealed that Dish originally planned to release the Hopper in February 2012 with both PrimeTime Anytime and Auto Hop included. The retransmission agreement between CBS and Dish was signed just a month earlier, on January 5th, seemingly proving that Dish had concrete plans to release the feature during its negotiations with CBS.
The two companies have been embroiled in a legal dispute over Auto Hop since CBS, along with Fox and NBC, originally sued Dish over the feature last spring. The issue came to a head at CES, when CBS forced its CNET subsidiary to scrap plans to give Dish’s new Hopper with Sling DVR its "Best of CES" award.
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