The Channel Wire

August 05, 2008

Cablevision's victory in a New York Superior Court allows the cable company to move forward with plans centered on a digital video recorder system that is opposed by film studios and television networks. The decision is the latest chapter in the two-year-long battle that has waged between Cablevision and a host of media companies, including Time Warner, News Corp., CBS and Walt Disney.

Next stop could be an appeal by the media companies to the U.S. Supreme Court.

Whether or not the media companies decide to file another appeal and move the legal saga forward remains to be seen. However, given the ruling and the supposed threat Time Warner and others perceive, it may just be a matter of time.

In a statement, James Anderson, a spokesman for Turner, which filed the original suit in 2006, said, "We respectfully disagree and are considering the appropriate next steps in this matter."

The issue the studios and networks, which include Time Warner, News Corp., CBS and Walt Disney, have with Remote Storage Digital Video Recorder (RS-DVR) is based on how their property is stored in the network. Traditionally, DVR boxes allow users to record content and then play it back on demand; consumers also can fast-forward and rewind through previously recorded content.

An RS-DVR service would allow those same customers to record programming and store it on Cablevision's network.

A network-based DVR system would reduce costs for both customers and the cable company. Currently, customers have to purchase a cable with a built-in DVR or a DVR separate. That box results in hardware and installation costs for both the customer and the company. By moving everything upstream, overhead is lowered for both parties. Currently, cable companies spend 10 percent of their capital investment on DVR boxes, Craig Moffett, an analyst at Bernstein Research, told Reuters.

The studios and networks, however, believe that storing content on Cablevision's network is closer to a video-on-demand service and therefore the cable company should have to obtain licenses in order to access the content. The judges in the New York Superior Court disagreed, saying an RS-DVR service "would not directly infringe plaintiffs' exclusive rights to reproduce and publicly perform their copyrighted works."

"This is a tremendous victory for consumers, which will allow us to make DVRs available to many more people, faster and less expensively than would otherwise be possible," Tom Rutledge, Cablevision's chief operating officer, said in a statement.