For the second week in a row, Dish Network has had a lead-off role in a major industry event. Controversy surrounding its new commercial wipeout function is proving inescapable.
No doubt many cable executives gathered in Boston for this week’s national cable convention will be attending the Celtics home playoff game tonight. Even their leisure time will include an element of the Dish battle.
Celtics legend Paul Pierce is endorsing the Auto Hop, the function that can automatically zap all ads for a network hit via a DVR. There aren’t plans for him to appear in a national ad blitz, but he’s been enlisted for a brief Twitter effort.
Through a tweet on his page and Dish strings, he directs users to a Facebook page with a video plugging Auto Hop. It’s a “promoted tweet,” which means while inserted as any other missive on Twitter, it’s labeled as paid for by Dish.
Using Pierce makes sense. The video includes the “Boston Guys,” the heavily accented characters invented by agency Barton F. Graf 9000 to front Dish’s TV campaign introducing its new Hopper DVR, which enables Auto Hop. Pierce tweets it’s a “hilarious” video “showing hometown pride.”
Pierce is nicknamed “The Truth.” How much the Auto Hop ultimately becomes a difficult truth for network executives to face remains to be seen?
Presumably, though, it is generating a lot of billable hours for lawyers looking for ways to stop it, while Dish says at least two networks, Fox and NBC, have turned down its ads.
The emerging war over Auto Hop got hurricane-force wind at its back last week as top industry executives condemned it during broadcast upfront week -- starting with NBCUniversal's Ted Harbert the day before it started. Daily headlines kangaroo-ed as new fall series were introduced.
Then on Monday, as the cable show kicked off, sure enough the initial panel took up the same topic. “A technology like that could create real carnage for the industry,” said Discovery CEO David Zaskav.
It was no surprise that Zaslav had some harsh words and threatened to make it part of carriage negotiations, even though it doesn’t affect his business yet. Joining him was Time Warner Cable CEO Glenn Britt, who suggested Dish may be short-sighted in moving to possibly upset the industry ecosystem because of threats like Zaslav's. The Auto Hop may give Dish more customers in the short term, but cost the satellite operator more in content fees down the line, he indicated.
So far, Auto Hop only zaps ads for prime-time shows on ABC, CBS, Fox and NBC. The company has said there are no technical hurdles to enabling it for Discovery’s “Deadliest Catch” and other cable shows, but it has no plans to do so.
Broadcast networks could use retransmission consent fee negotiations with Dish to try and thwart the zapper. Cable networks could take a similar approach with their carriage fee stand-offs.
Discovery spends a ton on content and such a transformative ad killer -- maybe in 10% of U.S. TV homes -- could set off a series of events diluting that investment. So, Zaslav suggested if Dish stood firm on keeping it – and if customers are embracing it, Dish would have trouble zapping it – Discovery would look to make up lost ad revenue in higher carriage dollars.
“I think it will become something that’s part of a negotiation … If there’s not going to be advertising, there has to be a lot higher (subscriber fees),” he said.
Dish has shown a willingness to drop networks, but Discovery has several that would be hard to go without. Taking the content-is-king approach, Zaslav said: “In the end, I don’t think it’s sustainable because in order (for Dish) to get our content we’re going to have to work together.”
If Auto Hop becomes successful enough that it peels subscribers away from Time Warner Cable, CEO Britt may have to soup up his company’s DVRs a bit. For now, with operators payng more and more for content, he seems wary of giving networks more leverage.
Instead of appealing to customers with ad-skipping opportunities, he indicated he’d like to focus on grabbing customers with promotions about opportunities to watch shows on-demand.
The dual dollars of affiliate fees and advertising has been a plus for the content business. “I don’t think we want to destroy one of those revenue streams … (because) either subscriber prices are going to go up or there’s going to be less content,” he said.
Either problem might be akin to the trouble Pierce could cause the Philadelphia 76ers tonight if he gets hot, which would set in motion a whole bunch of different Twitter activity.