Dish’s Networks' Hopper Digital Video Recorder has an Ad Eraser.

New York Times By BRIAN STELTER Published: May 16, 2012 Broadcast television executives came to New York this week, as they do every year, to talk up their new TV shows in front of advertisers. This year, they are having to talk about yet another technology trying to tear them down. The disruptive technology at hand is an ad eraser, embedded in new digital video recorders sold by Charles W. Ergen’s Dish Network, one of the nation’s top distributors of TV programming. Turn it on, and all the ads recorded on most prime-time network shows are automatically skipped, no channel-flipping or fast-forwarding necessary. Some reviewers have already called the feature, named Auto Hop, a dream come true for consumers. But for broadcasters and advertisers, it is an attack on an entrenched television business model, and it must be strangled, lest it spread. “How does Charlie Ergen expect me to produce ‘CSI’ ” without commercials? asked Leslie Moonves, the chief executive of the CBS Corporation, in response to questions from reporters on Wednesday morning before his annual upfront presentation. Ted Harbert, the chairman of NBC Broadcasting, struck a similar note at his network’s presentation on Monday, calling the Dish feature an insult to the television industry. “Just because technology gives you the ability to do something, does that mean you should? Not always,” he said. Unlike the music and news businesses, television has been mostly successful at fending off technological challenges. Several network owners worked together to start Hulu, an online streaming Web site intended to curb piracy. This year, when a start-up called Aereo introduced a service to stream New York TV stations via the Internet, the stations banded together in filing two lawsuits to stall it. The lawsuits are pending. The Auto Hop is noteworthy because it originated not from a start-up but from a satellite distributor with longstanding ties to the rest of the TV industry. Dish Network regularly negotiates with the networks for the rights to rebroadcast programming. Without that programming, subscribers would switch distributors. Yet Dish has still decided to promote its ad eraser, which comes with the Hopper, a new DVR that can record all the prime-time programming on ABC, CBS, Fox and NBC simultaneously. As network executives tell it, Dish Network is a friend turned foe, once preserving the advertising model but now threatening to turn on a doomsday device. (It didn’t help Dish’s cause that it gave the networks less than a day’s notice before announcing the feature last Thursday.) So they are closing ranks to try to stop it. At least one of the network owners, News Corporation, is no longer accepting Dish’s new DVR ads on any of its television properties. It and several other owners are examining whether they can sue Dish, the same way they sued a maker of DVRs a decade ago, according to several people with knowledge of the deliberations, who insisted on anonymity to speak freely about the internal discussions. James L. McQuivey, a vice president and analyst for Forrester Research, said that “with Dish’s aggressive move to please the end customer rather than advertisers, it’s clear that in the fight for TV revenue the gloves have finally come off.” He continued: “The fact that Dish would be willing to anger some of its most important content partners just goes to show how desperate these times we live in really are.” The desperation stems from the persistent fear that subscribers will forgo paying for television service and turn to Internet alternatives instead. A feature like Auto Hop is a drastic step “to keep consumers interested,” Mr. McQuivey asserted. The technology to automatically skip TV ads isn’t new. TiVo, one of the original DVR makers, flirted with such a feature about a decade ago. Another maker, ReplayTV, actually put such a feature in place, spurring lawsuits from the major TV networks. In 2003, after the owner of ReplayTV filed for bankruptcy, the new owners dropped the feature. A company executive was quoted as saying at the time that “we will take features out because we want to be a positive force in the industry.” TiVo has taken the same approach, promoting ways to deliver ads to viewers even as they’re fast-forwarding through them. “We’ve gone from being a black hat to being more of a white hat,” said Tom Rogers, the chief executive of TiVo. He was an executive at NBC a decade ago when the network was considering making an investment in TiVo. One of the conditions of the investment, he said, was that “they not have an automatic commercial skip.” TiVo’s Web site specifies that its devices “do not offer a commercial skip feature,” though there is a way to turn on a 30-second skip-ahead button. Mr. Rogers said Dish’s all-ads-skipped button takes the notion “to an extreme.” But Dish asserts that the technology actually promotes broadcasting and encourages people to sample new shows.