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Networks target SonicBlue
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November 1, 2001: 6:39 a.m. ET
Disney, NBC, Viacom file suit to stop company's digital recording device.
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SANTA MONICA, Calif. (CNNfn) - Major television networks and production studios have filed a lawsuit against SonicBlue claiming its new digital recording device, Replay4000, violates the companies' copyrights.
Some of the companies launching the suit are investors in SonicBlue.
The suit, filed by Walt Disney Co.(DIS: Research, Estimates), General Electric Co.(GE: Research, Estimates)'s NBC and Viacom (VIA.B: Research, Estimates) among others, says the Replay4000's option to watch programming with advertising deleted harms the studios' and networks' ability to earn money from their product. The suit also takes issue with a function that allows users to send copies of programming over the internet.
"In both cases, the Replay 4000 deprives copyright owners of the means by which they are paid for their creative content, and thus reduces their incentive to create programming and make it available to the public," the companies said in a statement released Wednesday night.
SonicBlue president Ken Potashner said he hadn't seen the lawsuit yet, but that the functions provided are not new. The ability to delete commercials is already a function available in previous Replay models.
And Potashner pointed out that sending programming over the Internet is not a novel idea -- anyone can record video on a personal computer and then e-mail out the file.
Potashner said the networks are looking to figure out the economics of this new form of watching television.
"The concept of consumers being able to watch shows without commercials is somewhere between a nuisance point to financial exposure for these guys," Potashner told CNNfn.
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Some of the companies involved in the suit, including NBC, are investors in SonicBlue according to Potashner. An NBC spokeswoman told CNNfn that NBC invested in Replay before it was bought by SonicBlue and holds a minority share.
"The investment was made at a time when Replay did not have this technology," said NBC's Rebecca Tompkins. "Our issue is not with (SonicBlue) as a company it's with the two new pieces technology that (SonicBlue) issued."
NBC has no plans to sell its stake in SonicBlue. Other networks could not be reached for comment. Potashner said SonicBlue is not looking to steal revenue from the networks.
"We are not looking to build a Napster situation," said Potashner. "We want to honor copyrights and support digital rights management and create a new economic stream for content owners and share in the revenues from the stream."
Shares of SonicBlue (SBLU: Research, Estimates) lost 6 cents to close at $1.06 Wednesday. 
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