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Ivi TV in Trouble

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Ivi TV, a provocative experiment in online TV, may be a trailblazer. But for now, it’s going down in flames.

On Tuesday last week, ivi was slapped with a preliminary injunction by a federal district judge in New York and forced to cease streaming most of its TV station lineup less than a year after it launched.

The injunction would seem to suggest a final decision in favor of the plaintiffs, network station owners—including ABC, NBC Universal and CBS—and program rights holders like Major League Baseball.

Ivi TV is, in the words of its founder, "a virtual cable company." It charges subscribers $4.99 for access via a video player downloaded from its Web site. Of the 70 channels currently offered, about 60 are the major network TV affiliated and owned-and-operated stations in New York, Los Angeles, Chicago and Seattle.

Ivi intends to appeal the decision and "explore congressional and administrative solutions," according to CEO Todd Weaver.

"We knew this was going to be a rocky road," Weaver said. "We’ve created the model of what pay TV should be on the Internet. This is a budding industry like cable or satellite when they got started."

Ivi tried to take advantage of what it portrayed as, essentially, a loophole in current law, but that proved a tough sell in court. Calling itself a cable service, ivi argued that it needed only to pay compulsory license fees for the TV stations it has been carrying. At the same time, because the FCC doesn’t classify ivi as a cable system, the company argued that it didn’t need to seek retransmission consent from broadcasters.

It’s doubtful that ivi will be able to make that argument stick with another court. “I’m not sure how they get to the next step,” said Daniel Brenner, a former attorney for the National Cable and Telecommunications Association, now a partner with the law firm Hogan Lovells. “While they have some interesting semantic arguments, they’re too clever by half. They have a policy argument, but that has to be addressed by Congress.”