XTV Closes Shop After It Can't Find Buyer
Three years after its grand rollout, the company that marketed hundreds of adult channels over an Internet protocol television network has called it quits, XBIZ has learned.
"The [company] has ceased accepting any new subscribers, has turned off its Internet distribution facilities and no longer provides any video content to any former subscribers," it said in a regulatory filing.
XTV, which operated in conjunction with mainstream content network ITVN, is closing shop without any remaining assets, according to the filing. The company, however, has approximately $10 million of unpaid liabilities, including more than $8.35 million of secured debt.
The company claimed in the filing that "business and subscriber base grew slower than anticipated and, to a large extent, has been displaced by new evolving technologies and services that have undercut [its] business model of charging subscribers a monthly fee for obtaining television programming over the Internet."
It also said that it wasn't able to raise additional capital and the company became doomed after Canada-based BroadShift Inc. abandoned efforts to acquire the company for $11.5 million in December.
Unable to find another buyer and because of "a continuing" negative cash flow, XTV and ITVN ceased operations on April 3.
The company had 85 investors, including long-time adult industry entrepreneur David Koenig, who told XBIZ that he couldn't comment on the closure until the business formally winds down within 20 days.
But Koenig, one of the founders of the company who owned at one time 18 percent of the company, did say that he is still in litigation over promissory notes and ownership of numerous domains.
"The cases are still wending their way through the legal process," he said.
ITVN and XTV sued Koenig in Los Angeles Superior Court for the return of dozens of domain names, including XTV. com. The URLs are registered in the names of Koenig, Holio Inc. or Holio.net, according to court filings.
Koenig also filed suit over $427,000 under a promissory note and approximately $170,000 of interest, attorneys fees, unpaid consulting fees and unpaid licensing fees.
A Los Angeles Superior Court judge is holding $148,000 of the company's cash pending the outcome of the Koenig suit.
XTV and ITVN President Charles Prast, who serves as the last remaining employee of the company, did not return calls at press time to XBIZ.
With its video-on-demand technology, XTV consumers could 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 varied for its offerings, XTV adult-channel bundles cost $29.95 a month, with an additional $99.95 for the set-top box.
The company marketed XTV in U.S., Asia, the U.K. and Germany. At one point, it had more than 200 webmaster affiliates that promoted the service, which rolled out in March 2005.