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Dish ad skipping will come home to roost

By PETER WHITE

Published: 18 May, 2012

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Only someone with a short memory or who has not been in this industry long, like Dish Network CEO Joe Clayton, could think that overtly skipping TV adverts would be embraced by free to air broadcasters and cable networks alike. Doesn't he know they rely on advertising for either 100% or 50% of their entire revenue?

But that's exactly what Clayton is testing with the new Auto Hop feature on Dish set tops in the US and we think he is headed for a monumental climb down. It is one thing to offer a DVR what CAN allow a consumer, if his thumb is swift enough, to fast forward through advertising, but it is quite another to create a software facility that does the job for him.

It is fairly well understood that the reason that pay TV companies like Dish Network get low priced TV content, is because the consumer inclusion on a TV channel means that the owner can make a lot more money selling adverts - with 14 million Dish customer homes added as potential viewers on any channel, it should certainly hike the value of advertising.

But it is also understood that in times of low advertising, content owners ask for high fees to carry channels; and in times of strong advertising content owners are more generous in cutting another deal for its content. What Dish will create is a permanent time of weak advertising on its network and a gradual hike in content pricing across the board, as deals expire and get re-negotiated. It is unlikely to get any more "most favored Nation" clauses in any of its deals.

Clayton sees it as a matter of law, and the debate is about whether or not US law will say that taking out advertising (even when the Auto hop feature has to be selected and set by a viewer) constitutes altering the nature of the TV content. If it does, Dish can be stopped very rapidly through the courts, but either way this move will backfire on it - sooner or later.

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