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Will Dish's AutoHop Die by Inches After the CBS Deal?

Network gets to abstain from ad-skipping software

Dish and CBS strike a deal that will ensure viewers see ads. Photo: Getty Images

Maybe the most interesting facet of CBS' deal with Dish Network, finally reached on Saturday morning after CBS was blacked out on the company's systems Friday evening, is its exemption from AutoHop. You can't skip ads anymore on The Big Bang Theory, folks. On the bright side, CBS is no longer suing Dish over the technology.

Dish's Hopper services have been a source of contention since the moment they debuted on the satellite TV provider. Almost as soon as Dish announced the product—which allows viewers to skip over ads—the industry was up in arms, citing damage to their ad revenue and a host of other complaints as Dish blithely ignored networks' concerns in the name of customer service.

The legal avenues for opposing the features weren't terribly fruitful. As networks including CBS and ABC sued Dish, the satellite company mounted a vigorous defense. "ABC has no more right to make consumers watch commercials than The New York Times has to make readers view the pullout ads in the Sunday paper," its lawyers earlier this year told an appeals court, which ultimately agreed with them.

The U.S. 9th Circuit Court of Appeals voted unanimously in January to deny Fox's request to rehear its case, and CBS seemed poised to suffer a similar fate.

But where the law fails, money is always a reasonable option to fall back on. Among other things, not being sued is a quality many CFOs prize, and it's one that was apparently on offer when CBS and Dish negotiated the contract. It's always difficult to tell how much these deals are worth in exact dollar figures. But assuming it's at the high end of what CBS usually commands from carriers—between $1.50 and $2.00 per subscriber per month, Wells Fargo analyst Marci Ryvicker told The Wall Street Journal in August—the agreement would be worth about $336 million a year, likely over several years.

"The agreement will result in dismissal of all pending litigation between the two companies, including disputes over PrimeTime Anytime and AutoHop," wrote a CBS spokeswoman in a statement to press. "As part of the accord, Dish's AutoHop commercial-skipping functionality will not be available for CBS Television Network-owned stations and affiliates during the C7 window."

And that leaves a very interesting question open: Is AutoHop now less attractive as an incentive to consumers than as a bargaining chip in carriage negotiations? Dish, after all, is in the unenviable position of needing to show year-over-year profit increases in a mature market. And in a mature market, churn is also a very serious consideration. So if Dish can hold its suppliers over a barrel with tech that will damage their bottom lines—and has been court-tested multiple times—it can likely command even more cash with the promise of limiting that technology.

Granted, that's not dissimilar to guaranteeing a new store owner's establishment won't "accidentally" catch on fire, but hey, it's definitely legal.

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