End Coming for Would-be Online TV Pioneer ivi TV?

For now, ivi TV, an inexpensive online alternative to cable and satellite TV, will have to cease streaming most of its lineup and perhaps shut its doors for good. Judge Naomi Reice Buchwald of the U.S. District Court for the Southern District of New York slapped ivi with a preliminary injunction Tuesday after a group of broadcasters, including ABC, NBC Universal and CBS, sued the online TV rebroadcaster for putting their station signals on the Internet without permission.

The decision could be catastrophic to ivi, which had argued that an injunction would “effectively put ivi out of business, most likely permanently.”

In the wake of the ruling, ivi wasn’t quite so fatalistic. In a statement, the company said it would appeal Buchwald’s decision to the Second Circuit Court of Appeals. The company also plans to “explore congressional and administrative solutions.”

Launched last fall, ivi has been offering subscribers a line up of local TV stations in New York, Chicago, Los Angeles and Seattle—available via a video player downloaded from its Web site for the relatively low monthly price of $4.99.

ivi had been trying to take advantage of what it portrayed as, essentially, a loophole in current law. 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 and has declined to step in to the dispute, the company argued that it didn’t need to seek retransmission consent from broadcasters, as cable and satellite companies are required by law to do.

In her decision, Buchwald concluded that ivi is not a cable service and can’t have it both ways.

“Judge Buchwald’s opinion is premised on her statement that ivi is ‘not complying with the rules and regulations of the FCC.’ This conclusion is simply false, as ivi has met with all the commissioner’s offices of the FCC repeatedly and has received assurances that we are in full and complete compliance,” said Todd Weaver, CEO of ivi.

Public interest groups, some of which—viewing ivi as a potential new competitor for cable systems—had filed an amicus brief supporting the company, expressed disappointment in the ruling, viewing ivi as a potential new competitor. “If competition to traditional cable service is to develop in the online distribution sector, then the FCC and Copyright Office are going to have to move quickly to update their rules to conform to the realities of new technology and consumer choice,” said John Bergmayer, staff attorney for Public Knowledge.

The case’s plaintiffs, on the other hand, had reason to celebrate, as Buchwald’s decision about the injunction seems to forecast a final decision in favor of the broadcasters—one that could put a permanent halt to ivi.