RapidTVNews: “According to MTV Networks (NYSE: VIA) Germany, Zattoo has cancelled the carriage contract because it feared legal consequences instigated by third parties which claim that the service doesn’t resemble conventional cable distribution. The contract concluded between the company, which operates the three channels and Zattoo contained a special cancellation clause in the event that Zattoo incurred copyright problems.”

SEE ALSO: Hollywood Launches Action Against TV Re-Streamer Zattoo

Zattoo works by re-broadcasting channels to a desktop app using peer-to-peer delivery - the streams include channels’ own TV ads but Zattoo inserts its own when viewers switch channels and open the app. Universal and Warner Bros. protested that Zattoo should not sell ads in to its movies. The company claims to operate in the UK through a legal loophole which allows free-to-air programmes to be re-aired, and has been building direct carriage relationships with other channels (I watched the Champion’s League final whilst making kitchen in the dinner this way). Even if Zattoo can be legally sure of selling its ads in to carried channels’ streams, the increasingly slim CPMs commanded for such things may mitigate against building a large business.