How Netflix, Inc. (NFLX) Is Tormenting Fox

Forget the content wars. The distribution wars are just as ugly, and they could get uglier soon.

According to Bloomberg, News Corp (NASDAQ:NWS)‘s Fox Broadcasting is suing to block DISH Network Corp. (NASDAQ:DISH) from activating features in its new “Hopper” set-top box that allows viewers to watch live and recorded shows on mobile devices.

Fox contends that DISH’s redistribution agreement doesn’t amount to a license for streaming or copying its content for personal use. Earlier, the two clashed over DISH’s “AutoHop” feature, which allows users to automatically skip ads in recorded shows. A San Francisco court has yet to rule on that issue, Bloomberg reports.

Regardless of who wins, you can be sure Netflix, Inc. (NASDAQ:NFLX) caused the brawl. Not explicitly, per se. But the company’s pervasive streaming network has changed viewing habits to the point where, in a recent survey, 85% of those polled told Nielsen they use their tablet while watching TV.

For these and many more consumers, device-independent TV is getting more real by the day. Have a smartphone? Sure, you can watch House of Cards. Have a tablet and an HBO subscription? Yes, you can dig into Deadwood during spring break.

As with everything in Hollywood, money is at the center of this debate, too. Fox wants to get paid every time its content is broadcast, which means, if I’m reading its argument correctly, viewers who want to stream live TV to a tablet should have to pay separately for that privilege.

The problem with this view is that time is irrelevant for televised events that aren’t sports, and viewers have been recording TV for rebroadcast ever since the invention of the VHS tape. Fox isn’t just fighting DISH — it’s fighting an irrevocable shift in consumer habits from which DISH, rightly or wrongly, is just looking to profit.

The article How Netflix Is Tormenting Fox originally appeared on Fool.com and is written by Tim Beyers.

Fool contributor Tim Beyers is a member of the Motley Fool Rule Breakers stock-picking team and the Motley Fool Supernova Odyssey I mission. He owned shares of Netflix at the time of publication. He also had a long-term call options position in Netflix. Check out Tim’s Web home and portfolio holdings, or connect with him on Google+, Tumblr, or Twitter, where he goes by @milehighfool. You can also get his insights delivered directly to your RSS reader.The Motley Fool recommends and owns shares of Netflix.

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