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Disney's New Deal With Dish Is Big Step Forward for Internet TV


It has become clear that Internet companies and the major broadcast networks will have to play ball.

The biggest companies in Internet tech, including Apple (NASDAQ:AAPL), Google (NASDAQ:GOOG), and Amazon (NASDAQ:AMZN), have long been pushing for a fully Internet-based TV option for consumers. And I'm not talking about streaming a show or two; I'm talking about a fully fleshed out, multichannel service that could allow consumers to watch all of the most in-demand channels over the Internet. Because major cable companies have been hesitant to tread down the Internet-TV path, progress has been slow (case in point, the perennially rumored Apple TV that never materializes). That is, until now.

Last Monday, Dish Network (NASDAQ:DISH) unveiled an exclusive new deal with Disney (NYSE:DIS) that represents a major step toward a fully Internet-based television service. At the heart of the deal is Dish's AutoHop ad-skipping feature, which the major networks have often complained about because it allows users to completely skip over commercials when watching DVR-recorded content. For the Disney partnership, Dish has agreed to disable the AutoHop function for three days after the original air date of a program. In exchange, Dish has gained the right to stream Disney video, both live and on demand, as part of an entirely Internet-delivered TV service (for more details, see CNet's coverage of the deal here).

Importantly, Disney owns the major network ABC, several cable channels, and ESPN, one of the biggest names in live-TV demand. By giving up its AutoHop feature for those three days, Dish will also expand its mobile app video capability, giving its customers even more of an ability to choose what, where, and when they watch. Want to watch a live college basketball game on your smartphone? No problem. An episode of Scandal on your tablet at lunchtime? Also easy to do. Dish will not offer Internet-only service yet -- customers will still need to have a physical dish to receive satellite signal -- but this is a major step in the direction that Apple, Google, Amazon, and others have been working toward for years.

Meanwhile, another major Internet-TV purveyor is in the news, not for a major industry deal, but for a major lawsuit. Last week, the four major networks -- Disney's ABC, CBS (NYSE:CBS), Fox (NASDAQ:FOX), and Comcast's (NASDAQ:CMCSA) NBC -- filed a brief to the Supreme Court taking issue with the business practices of online-streaming company Aereo. A New York City-based start-up, Aereo allows users in certain metropolitan areas to stream network television for $8 per month, the same price Netflix (NASDAQ:NFLX) charges for membership. The broadcasters say that Aereo, by not paying for the rights to retransmit network signals, is violating copyright laws. They warned that legal victory for Aereo would threaten the broadcast industry's business model, which relies on charging companies like Dish and Time Warner Cable (NYSE:TWC) for retransmission rights.

Representatives of Aereo have argued that their service does not violate any federal copyright laws, and actually serves broadcast companies by appealing to cord-cutters who would otherwise completely abandon the major networks.

But on Monday, the US Department of Justice sided with the broadcast networks in the Supreme Court case. The DOJ has argued that Aereo allows consumers to "gain access to copyrighted content in the first instance -- the same service that cable companies have traditionally provided."

And so the battle continues.

(See: Help Us, Aereo, You're Our Only Hope Now)

Follow me on Twitter: @JoshWolonick and @Minyanville

No positions in stocks mentioned.
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