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a legal quandry - with massive implications

Sand_2 Techdirt reports on an intriguing case that while on it's own may not seem that far reaching, the implications of this legal decision may well shape the future media landscape (see below)

The Case

Flying J is a truck stop operator.

They have been paying for a license to show TV content.

They have since begun skipping their broadcasted ads and inserting their own.

The Discussion
Their argument is: time skipping is legal!  It is our right to turn off the screens during ads, or to show our own ad streams in place of the content if we so desire!

Content owners are bringing them to court for copyright infringement.

If I can legally skip ads or turn off the tv whenever ads are shown, why can't I insert my own?

In the first model the content owners ads are not shown, in the second their ads are likewise missing.  Where is their loss? 

Techdirt reports:

You could even take the argument one step further and say that if Flying J employees turned off the TV whenever commercials were on (or, more realistically, changed the channel), it would still be perfectly legal. The only thing that seems to have somehow made this illegal is the introduction of the automated device, which doesn't even do anything to the broadcasters' content (which, again, has already been paid for). It's just blocking third party content, but that third party isn't a part of the case. So it's difficult to see how this is copyright infringement at all. Instead, it sounds a lot more like felony interference of a business model masquerading as copyright infringement.

My Thoughts
I would like to believe that the content owners are correct.  When you license a TV stream, you are licensing the right to display the stream.  If you want to edit the stream, that is your right.  If you want to show other content on the same television streams, that is your right.  However, to insert your own ads - to directly monetize their content - without a contract or clause allowing such behavior, should be a violation of copyright law and the licensing agreement. 

The Implications for the Future Landscape
Perhaps the most important trend here is not the case itself, but the implications therein.  If Flying J wins, what's to stop Tivo from offering a free Tivo to every home in America - one that will timeshift and skip ad breaks in the television content, replacing them with fewer but targeted ads?  Think about it: replace a 3 minute commercial break with a 45 second break containing three targeted fifteen second ads and you've created serious equity!  This should be enough to offset the cost of the hardware, and could put a significant dent in network viewership!

I'm not a legal expert, I'm just trying to figure out where we need to draw the line.  And hey, what if there is no line?  How will this change the media landscape as we now know it?