Don't most students tape classes anyway at this university? If you have 700 students in your auditorium, I would think you might want to tape the lecture to digest later?! It's a public university; therefore, public info. No?
I think as long as students don't sell the tapes, I don't think it is a problem. Many students tape the lectures because professors speak very quickly, the material is can be dense and sometimes the professor has an accent that makes it hard to understand with the first listen. I believe the students have paid for the information with their tuition and they can dispose of it at their discretion.
They're attempting to claim that it's a violation of the professors' intellectual property rights. I've also heard of attempts being made to make students sign NDAs, or at least seen it talked about (not sure how "real" that one is).
These tactics are purely an attempt to hide the real issue, which is the extreme political bent many professors bring to the classroom, often in inappropriate ways (massive attempts at "feminism" indoctrination in Freshman English Comp & Lit classes, that sort of thing).