Walt Disney Co. (DIS) is close to a programming agreement that would settle litigation over Dish Network Corp. (DISH)’s ad-skipping technology, according to two people with knowledge of the situation.
Disney, the world’s largest entertainment company, could receive compensation for technology, known as AutoHop, that lets Dish subscribers skip commercials in broadcast shows they have recorded, according to the people, who asked not to be identified because the discussions are private.
Resolution of the dispute with Dish, the second-largest U.S. satellite TV service, could make ad-skipping a regular feature of TV viewing, and ease the tension between Dish and other programmers. The company is also involved in litigation with CBS Corp., Comcast Corp.’s NBC and 21st Century Fox Inc.’s Fox over the feature, which threatens to undermine the effectiveness of network ads.
Discussions to settle the ad-skipping litigation are part of wider contract talks between Burbank, California-based Disney and Dish, based in Englewood, Colorado, for future rights to programming from ABC, ESPN and the Disney Channel. An existing accord between the parties expired in September.
By agreeing to let Dish customers skip ads on ABC network programs they have recorded, Disney could receive higher monthly subscriber fees, the people said. Broadcast networks have been asking pay-TV providers for compensation for their over-the-air programming, similar to what they get for their cable networks.
Disney has said such fees could bring in as much as $500 million annually by 2015.
The AutoHop technology, introduced by Dish in May 2012, lets the company’s satellite-TV customers skip commercials on recorded broadcast TV shows. The company had 14 million U.S. subscribers as of the third quarter.
Dish is working with TV networks to deliver more targeted ads based on consumer information collected by set-top boxes, Warren Schlichting, the company’s senior vice president of media sales and analytics, said in an interview in December.
Disney fell 0.2 percent to $73.11 at 2:25 p.m. in New York. The stock rose 53 percent last year. Dish gained 0.2 percent to $56.60 and gained 59 percent in 2013.