LOS ANGELES AND WASHINGTON — The U.S. Supreme Court on Monday blocked an effort by major media companies to quash a technology that threatens their already deteriorating advertising business.
Plaintiffs including CBS, Fox, NBC Universal, Turner, Viacom and Walt Disney had asked the justices to reverse a lower-court ruling that allowed Cablevision Systems Corp. to offer a so-called remote-storage DVR, which enables viewers to record and store shows on the operator's computers rather than on a set-top box in subscribers' homes.
By rejecting the case, the court left the previous decision intact and cleared the way for Cablevision, a New York-based cable operator with 3.1 million subscribers, to launch the service by late summer.
The decision is likely to lead to an increase in the number of viewers who fast-forward through commercials, undermining the ad-based business model on which networks rely.
"The content owners are probably very agitated right now," said Derek Baine, senior entertainment analyst with research firm SNL Kagan Associates. "It's one more knife in the back."
As soon as Cablevision announced plans in March 2006 to introduce the service, it was challenged in court by a consortium of networks and Hollywood studios that argued that remote-storage digital video recorders constituted new on-demand programming for which the cable operator should pay a license fee.
A federal judge in New York briefly blocked Cablevision from moving ahead, but last year the U.S. 2nd Circuit Court of Appeals reversed that ruling.
Though Cablevision's largest competitors, Comcast and Time Warner Cable, are not planning to start offering remote-storage DVRs immediately, the high court's decision hastens the ongoing decline of live TV viewing for entertainment programs. More than a third of consumers have DVRs in their homes, according to Leichtman Research Group.
That will probably add to the headaches of networks reeling from the declining ad market, especially if Cablevision's bigger competitors follow suit.
A spokesperson for Time Warner Cable, the nation's second-biggest cable operator, said the company would consider offering remote-storage DVR service once it was certain there would be no further legal challenges.
