TV Copyright Coalition Pressures PVR Makers

Copyright hysteria is one of the entertainment industry's longest-running programs. Last week's episode featured an announcement by the recently formed Advanced Television Copyright Coalition (ATCC) that the group would exert legal pressure on TiVo, Inc., and RePlay Networks, Inc., two Silicon Valley-based makers of personal video recorders (PVRs). These are hard-disk-based video recorders that allow users to easily shift viewing times and instantly zip past commercials if they wish. The machines' manufacturers will be asked to sign licensing agreements for the use of the group members' content.

ATCC members include CBS, Walt Disney Co., News Corp., Discovery Communications Inc., and Time Warner Inc. The group fears that PVRs, which have not yet penetrated the market to a significant extent, will allow TV viewers and network providers too much freedom to control TV. The ability to delete or substitute commercials could erode broadcasters' advertising value, causing a loss of revenue.

If PVRs become widespread, the exceptional degree of time shifting they offer could mean the end of the concept of "prime time" and thus further erode ad revenue. (VCRs have always offered this capability, but the difficulty of programming them has meant that most VCRs are used primarily as players.) TiVo's machine costs about $500 and can record up to 14 hours of programming at VHS-level resolution.

The new PVRs have the coalition's lawyers working overtime. The ATCC is asking TiVo and RePlay to sign licensing agreements to use its members' content, or face lawsuits requiring them to do so. ATCC attorneys deny that the move is an attempt to suppress the machines, like the Disney-funded losing battle against the VCR in the early 1980s. "In no way is this an effort to stop PVRs. It's an effort to see they grow up in a way that's good for the people who supply the TV product and for 'personal TV' businesses as well," says Bert Carp, a coalition attorney. "We think these businesses should develop through a contractual relationship with the people supplying programming."

A RePlay spokesman told the Wall Street Journal that his company "looks forward to working with all industry groups" involving PVR technology. He wouldn't say if RePlay would agree to pay license fees. TiVo made no public statement about the controversy. Curiously, four members of the ATCC are minority investors in TiVo. CBS, Disney, Discovery, and News Corp. affiliate TV Guide Interactive all bought in because of PVRs' potential. Disney and several other big players are also planning to invest in RePlay. Announcements to this effect are expected later this week.