All broadcasters should follow the lead of CBS’s Leslie Moonves and threaten to use their retrans clout to come down hard on Dish Network and the Auto Hop commercial-skipping feature of its Hopper DVR. Allowing subscribers to skip all spots in recorded programs at the touch of a button is a broadcasting killer.
“Hopper cannot exist,” CBS CEO Leslie Moonves told investors at the Bank of America Merrill Lynch Media Conference Wednesday. “If Hopper exists, we will not be in business with [Dish]. We cannot produce episodes for $3.5 million apiece and have the people at Dish say they will pull out the commercials. We will not be on Dish. We will go elsewhere.”
The message to Dish is clear: Stop marketing the Auto Hop feature on the Hopper mega-DVR that automatically zaps TV commercials or be prepared to stop including the CBS O&Os in its satellite TV service after the current retrans deal expires.
I think he was also sending a message to CBS affiliates and perhaps the affiliates of other networks. They, too, should cut off Dish at retrans time if its persists with Auto Hop.
Moonves can’t sit in a room with CBS affiliates and conspire to set common retrans terms. But he can make a public statement and broadcasters can read it and act accordingly.
That’s the American business way, made famous in TV by John Malone during his reign as the king of cable in the 1990s. He would make a comment at a press conference and every other cable operator would know what to do next. That’s one of the reasons that broadcasters went without retrans fees for more than a decade.
So, let’s put this on a bumper sticker: “Skip Spots, Skip Dish”
Got it? Good.
It would help, by the way, if other broadcasters would publicly state that they won’t do business with Dish until it dumps the Hopper ad-zapper. It would let Moonves know he is not alone and let Dish know that it may have created a bigger mess than it figured.
Remember, Dish Chairman Charlie Ergen is a gambler and he does hold some cards — 14 million paying subscribers that collectively account for 12% of TV homes.
His instinct will be to bluff his way through this. At a New York press conference the day after Moonves spoke, Dish Network CEO Joe Clayton began that process. “Let me say this to Mr. Moonves and the broadcasters, they would be well advised to tune into the consumer,” Clayton said at press conference yesterday.
Clayton added in an interview: “Mr. Moonves feels that he can bully the consumers and that he can bully his programming partners. I don’t think that plays well.”
Isn’t that a hoot? Dish portraying itself as the champion of the people and a victim of bullying.
The concern for consumers is a little ironic given that the FTC just filed suit against Dish for alleging badgering millions with telemarketing calls even after they asked to be on do-not-call lists.
And Ergen & Co. is anything but a victim. Among the last of the great media entrepreneurs, he made billions with highly aggressive legal, regulatory and marketing tactics that sometimes not only went beyond accepted business practices, but sometimes beyond the law.
For nearly a decade, until a federal court finally shut him down in 2006, Ergen flagrantly flouted a law barring satellite operators from importing distant broadcast signals into a market if local affiliates were available.
He was only allowed back into the distant signal business in 2010 after promising in a settlement to distribute local TV signals in all markets.
Over the past two years, Dish has been involved in nearly half of the 45 program blackouts in the wake of carriage talks gone bad. In almost all the cases, the broadcasters involved are small groups in small markets without much clout. But then, bullies rarely pick up someone their own size.
Of course, the worst kind of bully is the one that runs off to complain to the grownups about those it can’t push around. Dish is the worst kind. It is stomping around Washington these days contending that paying broadcasters — as it has been paying cable networks all these years — is an intolerable and crushing burden.
Hopper isn’t all bad. Giving subscribers a single button that allows them to record all of primetime of the Big Four networks might work in the networks’ favor. But also giving them a single button that automatically skips all the commercials completely undermines the broadcasting business model that still mostly relies on people watching commercials. If Dish gets away with it, others will follow.
I know, broadcasters raised similar alarms about VCRs and earlier generations of DVRs, and in retrospect they were too shrill. But this is clearly different. The Hopper auto-zapper is a broadcasting killer if it becomes pervasive.
The fate of the Hopper will not be determined solely in the marketplace. Dish and the broadcasters have squared off in the courts. But the courts move slowly and where they will come down is anything but certain. Unbelievably, they just allowed Aereo to move ahead with its wacky scheme for distributing TV stations on the Web without permission of the stations or other copyright holders.
The thing for affiliates to do in the case of Dish is to follow the lead of Les and fight this out across the retrans negotiating table. The affiliates can win if they believe Dish needs network programming more than they need Dish distribution.
All together now: “Hopper cannot exist.”