February 4, 2000 4:45 PM PST

Plug to be pulled on iCraveTV?

The short yet eventful saga of Net television start-up iCraveTV.com may finally come to an end early next week.

Sources say negotiations between iCraveTV and the giant broadcasters suing the company are reaching a close, and a settlement agreement is expected as soon as Monday. That agreement would likely see iCraveTV permanently shut its digital doors, at least in its current form.

"I suspect the broadcasters would settle for nothing less," said one source close to the negotiations.

iCraveTV, launched in lateOnline TV may spark Net battle November, had the bold business plan of streaming 17 U.S. and Canadian television stations online, uncut and uninterrupted. But it didn't ask the television stations on either side of the border first--and that set alarm bells ringing.

Just days after the Web site launched, Canadian and U.S. TV stations, networks, movie studios and even the National Football League were threatening to sue. The companies followed through with actual lawsuits last month. And last Friday, a judge ordered iCraveTV to shut down its TV site pending a full court hearing scheduled for next week.

The site has been shut down since shortly after that ruling.

The broadcasters argue that iCraveTV was simply stealing their content, without permission or payment. In their lawsuit, the American TV networks and movie studios called the site "one of the largest and most brazen thefts of intellectual property every committed in the United States."

But iCraveTV chief executive Bill Craig has long contended that he was acting legally under Canadian law. That country's regulations allow satellite TV companies and cable companies to capture TV broadcasts and retransmit them over their systems without asking permission, as long as they pay into a copyright holders' fund. Craig has said he was willing to do the same thing, but that the TV networks and stations refused to meet with him to discuss any kind of appropriate compensation.

iCraveTV executives could not be reached for comment.

The company's legal argument appears to be withering in the face of the broadcasters' legal onslaught. The sports leagues are asking for more than $5 million in initial damages, plus more as the judge sees fit. America broadcasters want $150,000 per work infringed--a potentially massive amount given the two months that the site was streaming night and day. The Canadians are asking for $75 million in statutory and punitive damages.

That's a huge risk for a small start-up--and iCraveTV's legal fees are also mounting.

Under the terms of the as-yet-unfinalized settlement agreement, iCraveTV would likely be barred from going back into business in its current form. It would likely be allowed to negotiate individual relationships with individual TV or video companies, and use authorized versions of their content online, however.

The outcome of this case will prove an important precedent as more online companies seek to boost their video content in an increasingly multimedia-focused Web. Future battles are also likely in the U.S. Congress, where Net companies narrowly dodged a proposal that would have effectively barred them from access to broadcast TV content. That debate is still ongoing.

The agreements between iCraveTV and the U.S. and Canadian broadcasters, while legally separate, will likely be announced simultaneously, sources said.

If no agreement is reached, iCraveTV and the U.S. parties are scheduled to go to court in Pittsburgh, Penn. on Feb. 8.

 

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