Dish Network chairman Charlie Ergen said a new ad-skipping feature that has infuriated major broadcast TV networks is a “competitively necessary” response to the explosion of cheap Internet video. Such Web video threatens the pay-TV ecosystem, he added, and it is partly caused by the TV networks themselves.
In a rare interview, Ergen for the first time explained publicly his rationale for introducing the ad-skipping service called Auto Hop last month. The reclusive satellite TV pioneer said the broadcast networks, several of which have sued Dish over the ad-skipping feature and have refused to run Dish ads promoting a Dish digital video recorder, have been “more emotional than realistic.”
With the new service, Ergen aims to force the networks to develop “more meaningful” ads, using, for example, demographic targeting of viewers.
“Ultimately, broadcasters and advertisers have to change the way they do business or they run the risk of linear TV becoming obsolete,” he said. “I think the conversation is going to go a lot faster because now there is a risk of inaction as opposed to no risk of inaction.”
So far, the service has provoked an intense backlash from broadcasters. On Wednesday, Dish said a Dallas-based TV station group, Hoak Media, pulled its 14 stations in six states off Dish’s service. Dish said Hoak is demanding a 200 percent rate increase and is asking that Dish turn off Auto Hop in Hoak markets. Hoak didn’t respond to requests for comment.
Two weeks ago, in what it says was a preemptive move, Dish sued in federal court in New York, seeking a declaratory judgment that it has the right to offer the ad-skipping service.
Within hours, three of the networks filed suit in a different court, claiming the service is a breach of copyright.
