A federal appeals court’s decision that could pave the way to Cablevision rolling out network DVR service has captured the attention of the industry. On Mon, the 2nd Circuit Appeals Court reversed a lower court ruling that said the MSO’s remote storage DVR would directly infringe on programmers’ rights to reproduce their copyrighted works. The court lifted the injunction and remanded the case back to the Southern District of NY for further proceedings. Programmers and studios, including CNN , Cartoon , ABC , Paramount and Twentieth Century Fox , filed the lawsuit in ’06, claiming Cablevision’s planned DVR service is nothing more than an unauthorized VOD offering. The appeals court sided with Cablevision’s argument that there is no copyright violation because the customer chooses what to record and store, not the cable operator. Programmers are expected to challenge the ruling. “We respectfully disagree and are considering the appropriate next steps in this matter,” a Turner spokesperson said. MPAA said it’s assessing the decision and reviewing options. Network DVRs, which would record and store programming at the headend, would be significantly cheaper for cable operators as they wouldn’t have to buy expensive DVR boxes for each DVR HH.
Estimating that DVRs account for as much as 10% of capital spending for the major MSOs, Sanford Bernstein ’s Craig Moffett published a research note that suggests this could be a huge differentiator for cable vs DBS. “Under the ruling, cable operators will not only be able to offer DVR functionality to all digital subscribers—whether they currently have a DVR or not—but also to every TV outlet in the house that has a digital set top,” Moffett wrote. Of course, the flipside is that increased DVR penetration means increased ad skipping, which could be especially bad for broadcast nets since they are 100% ad-supported.