Disney’s Dish Deal Includes Ad-Skipping Retreat

Dish Network has agreed to scale back its AutoHop ad-skipping technology

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Satellite giant Dish Network and entertainment titan Disney have struck an important agreement that paves the way for Mouse House video content — including ABC and ESPN — to be delivered to consumers as part of a new Internet offering, the two companies announced late Monday.

In an apparent concession as part of the deal, Dish has agreed to scale back its AutoHop DVR ad-skipping technology, which has been the subject of a closely watched legal battle between the satellite network and the major broadcasters.

The deal represents a significant victory for Dish Chairman Charlie Ergen, who jumps to the front of the pack in the race to deliver TV programming that’s accessible over the Internet on a range of devices, including smartphones, tablets, gaming consoles and old-fashioned televisions. Financial terms were not disclosed.

The agreement grants Dish the right to stream live and on-demand content from ABC-owned broadcast stations and other ABC and ESPN properties as part of a new Internet-based offering, the two companies said, although it’s unclear when such a service will launch. With the Disney deal in hand, Dish could now seek to strike similar agreements with other programming giants, including 21st Century Fox, which owns FOX; Comcast, which owns NBC; and CBS.

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As part of the agreement, Dish will disable AutoHop functionality — which allows consumers to skip ads on ABC shows that they’ve recorded — for three days following the initial broadcast. That feature had been at the center of a contentious copyright dispute between Dish and the major broadcasters, who felt that AutoHop threatened their advertising revenue. All pending litigation between Disney and Dish over AutoHop has now been dismissed as part of the pact, the two companies said.

John Bergmayer, Senior Staff Attorney at Public Knowledge, a D.C.-based digital rights group that has long argued that AutoHop is a legal technology, said he was disappointed that a popular consumer service like AutoHop became a bargaining chip in a financial deal between corporate giants. “If Disney and Dish want to come to a distribution agreement where Dish agrees to disable legal features on its DVR, that’s a commercial matter between the two companies,” Bergmayer said. “But it’s unfortunate that Disney or any company would want to take away the flexibility that consumers are legally entitled to in their own homes.”

Anne Sweeney, Co-Chairman, Disney Media Networks, and President, Disney/ABC Television Group, called the agreement “one of the most complex and comprehensive we’ve ever undertaken.” She added: “Not only were innovative business solutions reached on complicated current issues, we also planned for the evolution of our industry.” John Skipper, President, ESPN & Co-Chairman, Disney Media Networks, said: “We worked with Dish to smartly address the future of the multi-screen world on several levels.”

The agreement also includes the renewal of retransmission rights, allowing Dish to continue to carry ABC and ESPN on its satellite network. The previous agreement expired last fall, and Dish and Disney have been working behind the scenes to craft a new arrangement, in hopes of avoiding an acrimonious spat like the one between CBS and Time Warner Cable that caused CBS and Showtime to be blacked out for millions of Time Warner Cable subscribers last summer.

The deal should be greeted warmly by sports fans who subscribe to Dish’s satellite service. As part of the deal, Dish will continue to carry various ESPN sports channels, and will now offer college football programming on the Longhorn Network and the upcoming SEC Network, the two companies said.