Koenig, Holio.net File Suit Over XTV Deal

Rhett Pardon
SANTA ANA, Calif. — Long-time adult entrepreneur David Koenig and his company Holio.net have filed suit against Interactive Television Networks Inc. over alleged breaches in their XTV network licensing and distribution deal and a promissory note, XBIZ has learned.

Koenig, who filed the suit in Orange County Superior Court, is a co-founder of XTV and parent company Interactive Television Networks, known as ITVN, which operates an Internet protocol TV network.

Koenig still owns nearly 18 percent of Woodland Hills, Calif.-based ITVN and supplies content to XTV through Holio.net, according to Securities and Exchange Commission filings.

Koenig would not comment on the matter to XBIZ, but the suit against XTV and ITVN claims $527,000 in owed funds, $120,000 in litigation fees and an unspecified amount over an alleged breach in a content licensing agreement.

Further, the complaint also requests a cease-and-desist order to delete from XTV’s service all of the content provided by Koenig and his company.

So far, according to ITVN in regulatory filings, Holio.net has accrued $79,000 for content viewed on XTV.

Calls to ITVN CEO Charles Prast went unreturned at post time, but the company said in a statement to regulators that Koenig helped fund ITVN operations in excess of $300,000 and made cash loans of $427,000 through the years.

Koenig also provided services to ITVN but no longer receives a salary.

In the SEC filing, the company dismissed the majority of Koenig’s and his company’s claims.

“We have valid counterclaims against the Koenig plaintiffs,” the company said. “We intend to vigorously contest the claims.”

With ITVN’s video-on-demand technology, consumers connect a set-top box to an existing broadband router, plug in the set-top connector to a television set and subscribe to the VOD channels.

While prices vary for its offerings, XTV adult-channel bundles cost $29.95 a month, with an additional $99.95 for the set-top box.

ITVN markets XTV and other products in the U.S., Asia, the U.K. and Germany. It has more than 200 webmaster affiliates that promote the service, which rolled out in March 2005.

The company, however, has had a tough time achieving a commercial success with its service. ITVN posted net losses of $7.3 million in 2006 and $6.2 million in 2005.

Attorneys from both sides meet Tuesday in Superior Court over the matter.