Meet ivi TV - Live TV over the Internet and ... legal?

Okay, I'm really not sure how they're going to get away with this, but meet ivi TV, providing Internet access to broadcast stations in Seattle and New York for a $4.99 per month fee. Fierce IPTV has a good overview of what ivi TV is doing:

• It offers more than three dozen broadcast channels, including ABC, CBS, NBC, FOX and Telemundo to Macs, Windows and Linux computers.
• It says it will feed to mobile devices, including the iPad soon.
• ivi claims it already has more content than Hulu, and will be adding more channels over time, and it will maintain an a la carte option as well.
• The platform is available via a downloadable app for $4.99 a month after a free 30-day trial.
• Want DVR functionality? It's yours for an extra 99 cents a month.

At the moment, the company has no contracts with any broadcasters, but ivi claims it doesn't need to, since it's an online cable system and, as long as it pays fees to the U.S. Copyright Office--which get disbursed to the broadcasters--it's covered. However, company officials indicate that says it's not inconceivable that the ivi will face some legal challenges.