But a growing slew of technology firms, from Amazon to Netflix, has roiled the industry by offering programs outside the traditional distribution channels that for years dictated what appeared on the living room television. For far less than what cable companies charge, these upstarts are giving consumers more control over what they watch and when they watch it, while enabling them to easily skip ads. Google, the owner of YouTube, became the latest to join this trend, unveiling a device on Wednesday that pumps online videos and other content directly into television sets.
Such innovations have raised questions about how many Americans are actually viewing commercials these days and cast a shadow over a basic way that television funds itself. Digital video recorders have become so common that many consumers fast-forward through ads. With Dish’s Hopper, people can watch shows free of commercials shortly after they are broadcast live.
Now that Hopper has received greater legal support, analysts expect cable companies, DVR providers and others who distribute television content to quickly offer similar services.
“This is another indication of the slow erosion of a dominant media company’s control over distribution of content,” said Gene Kimmelman, a former senior antitrust official at the Justice Department. “That control is slowly but increasingly being handed over to the consumer.”
Shortly after it was introduced in May 2012, the Hopper service set off alarms at Fox Broadcasting. In its lawsuit, which was supported by other broadcasters, Fox sought a court order to halt Dish’s service, arguing that it violated copyright laws. But the U.S. Court of Appeals for the 9th Circuit agreed with a lower court’s rejection of Fox’s request.
In an opinion written by Judge Sidney Thomas for the three-member panel, the appeals court determined that consumers were free to do anything they want with their recordings of Fox programs, as long as they don’t resell the content. Thomas cited the 1984 Supreme Court ruling that stated Sony Betamax video recordings were legal.
Besides, Thomas added, “Fox owns the copyrights to the television programs, not to the ads aired in the commercial breaks.”
Fox said it is reviewing its options. The company could decide to pursue the case, which could reach the Supreme Court.
“We are disappointed in the court’s ruling,” said Fox spokesman Scott Grogin in a statement. “This is not about consumer choice or advances in technology. It is about a company devising an unlicensed, unauthorized service that clearly infringes our copyrights and violates our contract.”