Fast-forwarding through commercials may very soon become easier, cheaper and more widespread following a decision by the Court of Appeals for the Second Circuit in favor of cable-provider Cablevision, reversing an earlier district court decision. The lower court had granted summary judgment in favor of the plaintiffs (content providers such as Twentieth Century Fox, The Cartoon Network, CNN and Disney), holding that Cablevision’s remote-storage digital video recorder (“RS-DVR”) infringed their copyrights by (1) copying the content, (2) reproducing the content on the hard disks it was stored on, and (3) distributing the content on demand to the Cablevision customers.

The Second Circuit’s reversal focused on Cablevision’s argument that there is no functional difference between a subscriber playing back a show recorded on the remote storage system and a subscriber playing back a show recorded on their traditional at-home DVR set: “Because each RS-DVR playback transmission is made to a single subscriber using a single unique copy produced by that subscriber, we conclude that such transmissions are not performances ‘to the public,’ and therefore do not infringe any exclusive right of public performance.”

Craig Moffett, an analyst at Sanford C. Bernstein & Co., called the decision a “seismic shift” in spite of the widely-held belief that it would be appealed. Indeed, Wall Street “shifted” its money from Tivo to Cablevision in the wake of the news, with shares of Cablevision jumping 2.25 percent and shares in Tivo falling 3.3 percent. Cablevision is in a better position now because their ability to offer RS-DVR service reduces the cost of the equipment, and thus the price to consumers; Tivo and other satellite television providers do not have the same remote storage and on-demand capabilities.

While this appears at first blush to be a clear win for TV viewers, with reduced costs and increased ability to record and watch shows, the result may be a decline in the quality of TV offerings as content providers are forced to include more “product placement” advertisements in order to maintain revenues.

— Andy Veit

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