NEW YORK Cablevision Systems Corp. (CVC.N) has lost a legal battle against several Hollywood studios and television networks to introduce a network-based digital video recorder service to its subscribers.
The New York-based cable operator said in a statement late on Thursday it is currently considering an appeal against the ruling by Judge Denny Chin of the U.S. District Court in Manhattan.
Cablevision was sued last May by several Hollywood studios and television networks, including those owned by Time Warner Inc. (TWX.N), News Corp. NWSa.N, CBS Corp. (CBS.N) and Walt Disney Co. (DIS.N), which charged that the planned service would violate U.S. copyright laws.
Cablevision had hoped a network-based DVR system, called Remote Storage DVR or RS-DVR, would have done away with the need for the installation of hundreds of thousands of digital set-top boxes in subscribers' homes.
This would potentially have saved Cablevision significant administration and maintenance costs. It already has installed over 500,000 set-top boxes in homes in its area.
Other cable operators had been vocal in their support for such a system.
But the studios and TV networks argued in two suits filed at the U.S. District Court in Manhattan that because the proposed service would allow subscribers to store television programs on the cable operator's own computer servers, it would be breaking copyright agreements by effectively retransmitting the programs.
The judge agreed with the studios and networks. "The RS-DVR is clearly a service, and I hold that in providing this service, it is Cablevision that does the copying," Chin said in his ruling.
He also dismissed a countersuit by Cablevision.
Cablevision had argued that DVR technology based on its network is as legal as digital video recorders in the living room, such as those produced by TiVo Inc. (TIVO.O) and Cisco Systems Inc. (CSCO.O)
"The RS-DVR is not a stand-alone machine that sits on top of a television," Chin said. "Rather, it is a complex system that involves an ongoing relationship between Cablevision and its customers."
Cablevision said it would be considering all its options and would continue to install conventional set-top boxes.
"We are disappointed by the judge's decision, and continue to believe that remote-storage DVRs are consistent with copyright law and offer compelling benefits for consumers -- including lower costs and broader availability of this popular technology, Cablevision said in the statement.
Cablevision shares fell 20 cents, or 0.65 percent, to $30.36 on the New York Stock Exchange.