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Broadcasters Eye Digital Threat to Commercials

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Coalition Hopes Copyright Law Will Ban Machines That Cut Ads
WASHINGTON, D.C.--A group of broadcast and cable networks has formed a coalition to combat the new video machines and TV sets that can digitally strip commercials from recorded programming.
The Advanced Television Copyright Coalition, made up of representatives from CBS, Discovery Communications, The Walt Disney Co., Time Warner and News Corp., argues that companies marketing digital "personal video recorders"--as opposed to regular VCRs--must acquire copyrights to the broadcast material that is recorded and then altered.
Some PVRs marketed by TiVo, Replay Networks and others allow viewers to record up to 14 hours of programming on a hard drive. The technology also enables viewers to strip out advertising from shows, thus editing programs to their own tastes.
The Supreme Court has ruled that recording TV shows on a VCR for personal use is legal. But CBS spokesman Gil Schwartz said PVRs fall outside that ruling because they alter material and use it in a manner different from the broadcaster's intentions. "The goal here is to make sure this new form of media entertainment plays by the same rules as the rest of the media industry," Schwartz said.
Jeffrey Edelstein, a New York lawyer specializing in ad law, added: "The networks can [also] argue that if these PVRs become widespread, it makes commercials much less attractive and [unfairly] impairs the revenue of the networks."
Forrester Research predicts that by 2004, 14 million people will use PVRs.
"We want to work with [broadcasters] to help resolve their copyright issues. We have no reason to want to violate copyright laws," said Steve Shannon, a Replay rep. TiVo would not comment.
John Kamp, a senior vice president at the 4A's, said the issue could affect TV's future. "Advertising pays for free TV," he said. "If you strip the ads out, there is no free TV left."
While coalition members are concerned, CBS, Disney and Discovery have collectively invested $32.5 million in TiVo. A similar deal is being brokered with Replay TV.