In a decision sure to affect millions of cable television subscribers, a federal appeals court Monday gave a green light to Cablevision Systems Corp.'s rollout of a remote-storage digital video recorder system.
In overturning a lower court ruling that had blocked the service, the 2nd U.S. Circuit Court of Appeals in Manhattan said the judge wrongly concluded that Cablevision, rather than its customers, would be making copies of programs, thereby violating copyright laws.
The next-generation technology would let any cable subscriber with a digital cable box store TV shows on computer servers rather than on a hard drive in their home.
Cablevision's system was challenged by a group of Hollywood studios that claimed the remote-storage DVR service would have amounted to an unauthorized re-broadcast of their programs. A lawyer for the studios did not immediately return a call for comment.
Cablevision, in arguing that control of the recording and playback was in the hands of the consumer, had relied on a landmark 1984 Supreme Court case which found Sony Corp. did not break copyright laws by letting viewers use videotape recorders to record shows for personal use.
Craig Moffett, a senior cable analyst at Sanford C. Bernstein, said the ruling "sent shock waves to every corner of the media landscape" by taking the availability of DVR-like function from 25 percent ot U.S. homes to nearly 50 percent.
That means many more viewers would be taping shows and watching them at their leisure, likely skipping many commercials. The ad-zapping ability of DVR devices has broadcasters and advertisers worried that fewer people will watch commercials.
The case has been closely watched in the industry as cable companies increasingly offer digital video recording services to their customers, and Moffett said it was likely to end up at the U.S. Supreme Court.