Fox had called for a preliminary injunction on Dish Network's Autohop ahead of a copyright ruling.
Broadcasters Fox, Comcast, NBC and CBS have each sued Dish Networks, saying the show recordings are unauthorised.
Fox said it would appeal against the ruling. It says Autohop is "destroying the fundamental underpinnings of the broadcast television ecosystem".
But Dish called the decision not to grant a preliminary injunction a "victory for common sense".
Its Hopper digital video recorder can record and store prime-time content from the four major networks for up to eight days.
And the Autohop feature lets viewers skip advertisements completely — rather than fast-forwarding through them — at the press of a button.