As questions persist about the fate of Dish Network’s automatic ad-skipping technology, there is at least one certainty: money talks. CBS CEO Leslie Moonves has said unless Dish abandons the Hopper DVR, he won’t allow the satellite operator to carry CBS content. But he has also suggested that he would drop that push if Dish paid CBS $5 a month per subscriber.
Station groups seem to have the same idea. In court papers, Dish says that affiliate groups have sought an added fee in carriage negotiations "specifically for each customer’s use of AutoHop." (That's the Hopper function that eliminates all ads in a recording.)
“Specific numbers were even proposed,” the satellite operator says. One court document has a sizable redacted list of proposed fees.
But Dish says it was able to make the deals without the added payments.
Before an agreement was reached last year, an executive at the Sinclair group indicated to the Los Angeles Times that Dish should pay more to offer the AutoHop.
Stations have also pursued Moonves’ initial suggestion: telling Dish to disable the Hopper or go without their programming.
In another court filing, David Shull, a Dish senior vice president, says during carriage negotiations several affiliate groups have asked that Dish subscribers be “prohibited” from using the DVR.
Dish has said no way, Shull says.
Last year, during a standoff with Hoak Media, Dish told the Los Angeles Times before a deal was reached that the station group was demanding that AutoHop be disallowed.
(The broadcast networks are in litigation with Dish, seeking to rid the earth of the AutoHop and other Hopper features.)
This isn’t to say that station groups have not been getting anything for their AutoHop-oriented demands. Even if not successful discretely, their requests could have provided leverage to wrangle substantial price increases out of Dish.
Speaking of leverage, there have been suggestions that Dish launched the AutoHop to gain some to drive down its carriage payments. But Chairman Charlie Ergen said this week at an AllThingsD event that “it’s not a leverage game, it’s really that technology has changed.”
Dish is competing with DirecTV, cable and telco TV operators, which offer DVRs, and the Internet, which might offer commercial-free programming, so he indicated that it needs the AutoHop to gain an edge.
He also suggested that the networks are backward-thinking when it comes to advertising and the Hopper actually offers them an opportunity to generate higher revenues. The device has the ability to serve targeted ads to viewers based on perceived interests, which could have advertisers paying a premium, he said.
The trouble is that under that scenario, the AutoHop could lose some of its customer appeal because programming would no longer be commercial-free TV.
“It makes sense then to give people more targeted ads that are more meaningful to them, which means you could run less commercials and … you actually could make more money on that revenue stream,” Ergen said, adding the “broadcast industry is slow to adapt to that.”
The promise of addressable advertising on a national level has been around for a long time. On paper, it sounds ideal and it's nice to theorize about at a conference. But Ergen may be overlooking that it’s nowhere near as easy as skipping commercials with the AutoHop.