After a failed marriage proposal to his girlfriend Robin Harris, Steven M. Kovacs moves into his own apartment. Taking advice from his friend Rick, Steven bribes cable guy, Ernie "Chip" Douglas, to give him free movie channels, which he does. Chip gets Steven to hang out with him the next day and makes him one of his "preferred customers."
Chip takes Steven to the satellite dish responsible for sending out television signals. Steven tells his problems with Robin to Chip, who advises him to admit his faults to Robin and invite her over to watch Sleepless in Seattle. Steven takes Chip's advice, and Robin agrees to watch the movie with him. Chip begins acting more suspiciously, running into Steven and his friends at the gym and leaving several messages on Steven's answering machine. When Robin arrives to watch the movie, the cable is out, due to Chip, who intentionally sabotaged Steven's cable. Chip fixes the cable under the condition that they hang out again, to which Steven agrees.
Chip takes Steven to Medieval Times, where Chip arranges for them to battle in the arena, referencing the Star Trek episode "Amok Time." Chip behaves aggressively, nearly killing Steven, who eventually bests him in combat. When they arrive at Steven's home, Chip reveals that he's installed an expensive home theater system in his living room. Chip and Steven later host a party and with Chip's help, Steven sleeps with Heather, who later Chip reveals is a prostitute and Steven throws Chip out.
Chip tracks down Robin, who is on a date with another man. When the man goes to the bathroom, Chip severely beats him and tells him to stay away from Robin. He later upgrades Robin's cable, saying that it is on Steven and Robin decides to get back together as a result. Steven tells Chip that they cannot be friends, which hurts Chip, which sets Chip on a series of vengeful acts. He gets Steven arrested for possession of stolen property, although Steven is released on bail.
During a dinner with his family and Robin, Steven is horrified to see Chip in attendance. Steven tells him to leave, but Chip tells him to play along or he will show everyone a picture of Steven with the prostitute. The evening goes from bad to worse, with Steven punching Chip after the latter implies he slept with Robin. Steven is fired from his job when Chip sends out a video of Steven insulting his boss that was recorded on a hidden camera in his apartment.
After doing some investigating, Rick tells Steven that Chip has been fired from the cable company for stalking customers, and uses the names of television characters as aliases. Chip calls Steven that night, telling him he is paying Robin a visit. Steven tracks them down to the satellite dish, where Chip holds Robin hostage. After a physical altercation and a chase, Steven is able to save Robin. As the police arrive, Chip goes into a speech on how he was raised by television and apologizes to Steven for being a bad friend. Chip dives into the satellite dish, knocking out the television signal to the entire town, just as the verdict in a highly publicized case involving a case like the "Lyle and Erik Menendez" killing is about to be revealed.
Chip survives the fall, but injures his back. As Steven and Robin reunite, Steven forgives Chip and asks for his real name. Chip jokingly replies "Ricky Ricardo." Chip is later taken to the hospital in a helicopter. When one of the paramedics addresses him as "buddy", Chip asks the paramedic if he is truly his buddy, to which the paramedic replies "Yeah, sure you are", causing Chip to smile deviously.

Question: How does Chip blackmail Steven while having dinner with Steven's family?
Answer: He threatened that he will show everyone the photo that was taken while he was with a prostitute.