• by Wayne Friedman , May 9, 2007

In an agreement bound to have a ripple effect on the DVR industry, Walt Disney Co.'s ABC and ESPN struck a deal with Cox Communications in which Cox's video-on-demand service will disable a feature that allows consumers to fast-forward through program content and TV commercials.

The test will start this fall in Cox's Orange County cable television system. Four major ABC prime-time series--"Desperate Housewives," "Grey's Anatomy," "Lost" and "Ugly Betty"--will be available for viewing the day after their broadcast premiere on Cox's VOD service.

As part of the deal, Cox will disable the fast-forward option on these shows as well as other content on ABC and ESPN. The deal also includes a provision that the two companies will work on a dynamic ad insertion system on Cox's On Demand service that would target specific ads to specific viewers.

The deal only applies to Cox's Walt Disney TV offerings on its VOD service--it has nothing to do with the fast-forward feature on DVR units of Cox's cable customers.

Still, the deal could set a precedent, say executives. ABC could do deals with other cable operators that include disabling the fast-forwarding function on all ABC programming that comes through a particular cable system--whether on VOD or on viewers' DVRs.

All that would radically change the DVR business, according to one media executive.

"If you start touching the fast-forward button on the DVR, you'd kill the DVR service," says one veteran media industry executive. "And if you did that deal with cable operators, you would have to make the same deal with satellite guys as well."

Last year, Mike Shaw, president of advertising sales for ABC, told MediaPost the company was looking for ways to disable the fast-forward function of DVRs when it came to ABC signals of its TV commercials sent to cable operators and satellite distributors. (MediaDailyNews, "ABC Looks Beyond Upfront To DVR, Commercial Ratings Issues" July 6, 2006).

He told MediaPost: "I would love it if the MSOs, during the deployment of the new DVRs they're putting out there, would disable the fast-forward [button]," Shaw said. He added that cable operators, who are beefing up their own local ad sales operations, "are in the same business we're in. They've got to sell ads, too," he said. "So if everybody's skipping everybody's ads, that's not a long-term business model for them either."

"I'm not so sure that the whole issue really is one of commercial avoidance," Shaw said. "It really is a matter of convenience--so you don't miss your favorite show."

That's the argument networks make when it comes to Internet viewings of prime-time shows. They say viewers have been accustomed to seeing commercials that can't be fast-forwarded. Disney's deal with Cox's VOD service is similar in that regard.

"VOD is the same thing as content placed on the Web--someone is doing the recording and storage for you," says the veteran media executive. "The Web is a convenience factor, for example, for people who forget to program their DVR."

Media networks might be pressed to move quickly in this testy area --while DVR penetration is still low--since public backlash would be greater when DVRs become more dominant among U.S. TV households. Nielsen recently said that DVR penetration is around 17%. "It's in our interest and the MSOs' interest to figure out something that works for the two of us," says Shaw.