initial launch, DISH Network has had trouble with their Hopper, with constant lawsuits from News Corp. NBCUniversal and CBS. At this year's International CES, Cnet, owned by CBS, pulled their Best of CES Award from the Hopper because the parent company's lawyers said they couldn't post a review of the product, let alone give it an award. They have since lost the Best of CES Awards entirely.
This week, the lawsuits, which allege that the Hopper's commercial skipping feature Auto-Hop is tantamount to piracy, hit a roadblock. The Ninth US Circuit Court of Appeals upheld a ruling by a lower court that said that the Hopper was likely legal. Because of this, the injunction that the networks were seeking was not granted and the case is likely to go to trial.
Obviously DISH Network is excited about the ruling. R. Stanton Dodge, DISH general counsel, said of the ruling,
This decision is a victory for American consumers, and we are proud to have stood by their side in this important fight over the fundamental rights of consumer choice and control.
A statement from FOX said,
This is not about consumer choice or advances in technology. It is about a company devising an unlicensed, unauthorized service that clearly infringes our copyrights and violates our contract.
As this case continues, it will be a fascinating face-off between two companies approaching the same topic from very different angles. DISH believes this is a battle over consumer choice and technological advances. The Auto-Hop feature gives consumers the choice on when and how to watch television programming.
The networks, on the other hand, believe this is a battle over content and business model control. In the same way that
FOX limits Hulu availability because of a fear of business model change, or CBS's lawsuit against Aereo for the same reasons, the networks are afraid of their broadcast business changing.
Aereo has already won over the networks, so has DISH Network. At this point, the networks have 2 choices: adjust their business models to live in the new media world, or make way for companies like Netflix and Amazon Instant Video, both of which have found a way to succeed in this new world.
It is interesting how two frightening topics can combine to make one super frightening topic. Unfortunately, that is what has happened this week. Let's recap the two individual stories and then where they intersect.
Huawei, a Chinese technology company, has been under investigation by the US government over
security concerns of their devices possibly allowing the Chinese government access to phone data. The company has responded to the concerns saying that they have nothing to hide and encourages the investigations, but has also stopped shipping handsets to the States. These concerns have been prevalent within the US dating back to 2008 when they tried to merge with 3Com, and in the UK since 2005 when they bid for the Marconi Company.
In other, ideally unrelated, news, the UK has decided to enforce mandatory opt-out ISP-level content filtering. They have joined great countries like China and North Korea in the forced filtering market. All of the country's major ISPs have agreed to implement these filters, which will filter content such as "pornography," "dating," "games," and "social networking."
So, where do these 2 stories cross? In a UK ISP named TalkTalk, who will be implementing a filtering system called
HomeSafe. The United Kingdom's Prime Minister, David Cameron praised the system as an example of "great leadership" in content filtering. As it turns out, HomeSafe is owned and operated by Huawei. Uh oh.
So, the company that will be providing content filtering for the UK's major ISP is run by the company the United States' Congress is convinced is responsible for, essentially, international espionage. If Huawei is actually conducting covert spying on foreign citizens via technology, this seems like the ideal way to make it happen.
Let's file this one under weird business relationships. Vivendi, the majority stake owner of Activision, made a request of the game publisher for a $3 billion dividend. Bobby Kotick, CEO of Activision, and Brian Kelly, co-chairman, decided that this was an unreasonable request and, instead, decided to purchase majority stake back from Vivendi.
$5.83 billion worth of stock will be purchased by Activision itself. $1.2 billion of that will come from on-hand cash reserves, with the remaining being borrowed from Bank of America and JP Morgan Chase. In addition to the stock buyback from Activision, an investment group led by Kotick and Kelly will purchase another $2.34 billion worth of stock, $100 million of which belonging to the two executives. Vivendi will retain the remainder of their stock holdings, amounting to 12%, versus the previous 60%.
Kotick said of the move,
These transactions together represent a tremendous opportunity for Activision Blizzard and all its shareholders, including Vivendi. We should emerge even stronger - an independent company with a best-in-class franchise portfolio and the focus and flexibility to drive long-term shareholder value and expand our leadership position as one of the world's most important entertainment companies...
The transactions announced today will allow us to take advantage of attractive financing markets while still retaining more than $3 billion cash on hand to preserve financial stability. Our successful combination with Blizzard Entertainment five years ago brought together some of the best creative and business talent in the industry and some of the most beloved entertainment franchises in the world, including Call of Duty and World of Warcraft. Since that time, we have generated over $5.4 billion in operating cash flow and returned more than $4 billion of that to shareholders via buybacks and dividends. We are grateful for Vivendi's partnership through this period, and we look forward to their continued support.
This is definitely a huge move for the company, but it could also be a scary decision. Activision is known for milking its franchises until they catch fire, and there is no telling whether Vivendi was involved in this decision at all, or for the better or worse. There is always the possibility that, in the end, their franchises will be even more affected in the future.
Activision's management believes that their earnings per share will increase as much as 30%, indicating that they believe significantly higher profitability without Vivendi. I am going to believe that this indicates they think they can release more unique games that people actually want to play as opposed to minor iterations on existing titles. Activision: prove me right.
Any developers, specifically Apple developers, were stumped this week as to why they may have had problems accessing the Apple developer website. For those affected, an email should have just reached your inbox explaining what happened. Apple said that email addresses, names and even actual addresses might have been compromised in an apparent website hacking.
Here's the official word from Apple,
Last Thursday, an intruder attempted to secure personal information of our registered developers from our developer website. Sensitive personal information was encrypted and cannot be accessed, however, we have not been able to rule out the possibility that some developers' names, mailing addresses, and/or email addresses may have been accessed. In the spirit of transparency, we want to inform you of the issue. We took the site down immediately on Thursday and have been working around the clock since then.
In order to prevent a security threat like this from happening again, we're completely overhauling our developer systems, updating our server software, and rebuilding our entire database. We apologize for the significant inconvenience that our downtime has caused you and we expect to have the developer website up again soon.
A spokesperson from Apple noted that the dev site is not "associated with any customer information" and that any "customer information is securely encrypted." We also know that Apple is extending memberships due to the outage and that any software that was published would not be removed.
Now, as this email was just released, we'll obviously have more details in the near future as to what happened, but for now take precaution and change some passwords, just to be safe. I guess this finally and officially disproves the whole "Macs don't have vulnerabilities" thing, even if
a report has already proven it.
Even after the courts ruled
in favor of Aereo in the appeal hearing, CBS still wasn't happy about it. In fact, the broadcasting company filed a complaint against Aereo for winning the appeal, in which Aereo responded by filing a complaint against CBS for complaining. Despite the nonsense, the case is still ongoing due to CBS' relentless effort to cling onto their old ways. This week, however, Barry Diller and Aereo scored another victory.
The US Court of Appeals for the Second Circuit flat-out refused CBS and Disney's request to rehear the entire case again, but this time in front of a full panel of judges. Here's how it went down: apparently, judges can be polled on if they wish to rehear a trial and, if the majority of judges do not wish to participate, the court will not hear the case again. That's a pretty cut-and-dry way of handling a re-appeal.
Everything isn't perfect, though, as Judge Denny Chin decided to issue a 30-page dissent on the matter, in which he wrote that Aereo is actually a "sham" and the company is a menace to the entire broadcast space. This adds to his previous negative remarks toward the company back in April. In this report, he said,
Indeed, the hardware and technology in Cablevision and the antennas and wiring at issue here are fast becoming obsolete in this era of the "Cloud" and wireless technology. Courts should follow Congress's lead and resist the urge to look "under the hood" at how these processes technically work.
The company is also fighting legal battles in Massachusetts, Virginia and soon Atlanta. The good news is that the case has not reached the Supreme Court and it won't. What that means is Aereo will be legal in each state it wins a potential case in. Ironically enough, the company has yet to bring up the Slingbox being legal, but it appears they're saving their heavy artillery for the later battles.