The Marketplace Reader

Cablevision wins appeals court ruling on DVRs

Richard Core Aug 4, 2008

Cable television companies have won a significant court victory with a ruling that will allow them to provide subscribers with “network DVR” services that could greatly increase on-demand TV viewing and the skipping of advertisements.

The U.S Court of Appeals for the Second Circuit in New York sided with Cablevision Systems Corp. over its plan to launch a remote-storage digital video recorder system. Instead of requiring subscribers to have a DVR box attached to each TV, the system would record and store subscribers’ viewing choices on the company’s computer servers.

Cablevision’s system was challenged by a group of Hollywood studios that claimed the remote-storage DVR service would have amounted to an unauthorized re-broadcast of their programs.

Bernstein Research analyst Craig Moffett told Barron’s Tech Trader Daily blog that the ruling would allow cable TV companies to cut costs and gain an edge over satellite TV providers:

“Cable operators would no longer need to provide a unique piece of hardware for each individual subscriber in order to offer DVR functionality,” [Moffett] writes. “DVRs have been one of the largest single drivers of capital spending in recent years, accounting for as much as 10% of capital spending for the major [cable companies.] Further, cable gains a huge differentiator versus their satellite competitors. Under the ruling, cable operators will not only be able to offer DVR functionality to all digital subscribers — whether they have a DVR or not — but also to every TV outlet in the house that has a digital set top box.”

Satellite TV companies, Moffett said, have no way to offer network DVR capability, which requires point-to-point connectivity.

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