Analyst Report: Network DVR Set For Summer Launch

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Cablevision Systems expects to launch its long-awaited network digital video recorder product, this summer and is in discussions with programmers regarding the controversial product, according to an analyst report Tuesday.
Sanford Bernstein cable and satellite analyst Craig Moffett wrote Tuesday that during a meeting with several top executives at the company, chief operating officer Tom Rutledge said that the RS-DVR could hit the street in the summer.
"The law of the land in our area is that network DVRs are legal," Rutledge said, according to Moffett's report. "We have won a case versus the copyright holders. We'll be rolling out our first product based on that later this summer. We'll move to centralized storage."
Rutledge was referring to an appeals court ruling last year, which reversed a lower court decision that said the network DVR violated programmers' copyrights. Turner Broadcasting System, ABC, CBS, NBC, 20th Century Fox, Paramount Pictures and Disney Enterprises sued Cablevision in 2006, accusing the cable company of directly infringing their copyrights with the network DVR, which has never been offered to consumers. The programmers had pledged to take the appeal to the U.S. Supreme Court, but the nation's highest court has yet to decide whether to take the case.
Cablevision has been testing the service within its Bethpage, N.Y. headquarters for several months.
According to Moffett, Rutledge hinted that a compromise could be worked out with programmers.
"I think ultimately we'll end up in some commercial arrangement with programmers," Rutledge said according to Moffett's report. "We're having discussions with the copyright holders that can make the network DVR model work in their best interests. If they allow physical DVRs to proliferate, it takes it out of their control. If they do it centrally, they could control ad-skipping, measurement, and the timeliness of advertisements, would clearly be in the interests of the programmers."
Cablevision spokesman Jim Maiella said in an e-mail message that the company would not comment beyond the report.
The network DVR has long been considered to be a more elegant alternative to set-top box DVRs, which break down frequently. Other cable operators like Time Warner Cable and Comcast have said that if the network DVR passes legal muster, they too would deploy it in their systems.
Moffett also wrote that Cablevision CEO James Dolan will run the company differently than his father, chairman and founder Charles Dolan and that the Dolan family will be fiscally conservative.
"The company has been run, over the past several decades, primarily by my father," James Dolan said, according to Moffett. "But I have brothers and sisters... Cablevision represents the wealth of six families that make up the children of Charles Dolan. You should anticipate that the family will take a point of view that is more financially conservative than what a single owner would take. We won't do anything to harm it, and will do more things to keep it healthy as a financial asset."
The younger Dolan also said that it is unlikely the company will go shopping for more newspapers anytime soon, like its $650 million purchase of Newsdaylast year, but did not rule out future acquisitions entirely.
"I won't completely rule out the opportunity if a really high value asset came along - it's not impossible - but we're basically grounded in the same things you're grounded in - free cash flow, and keeping the financial building blocks in shape," Dolan said according to the Moffett report, adding that "Newsday is the last venture you'll see of its kind."
Todd Spangler contributed to this report.

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