Has video distribution startup GridNetworks been sold? That's the word from The Seattle Times and BusinessofVideo.com, which reported this week that the Seattle startup is in the midst of being acquired.

Citing unnamed sources, BusinessofVideo reports that the buyer is a New York-based desktop video company. That would rule out a couple possible big-name suitors. Comcast, which purchased Seattle video startup thePlatform in June 2006, and Cisco, the networking powerhouse, sunk cash into GridNetworks in the past 16 months. It raised a $9.5 million venture round in October 2007, with total funding in the company at the time under $20 million.

NewTeeVee -- also citing unnamed sources -- reports that there won't be much of a return on the capital invested.

Led by former Internap CEO Tony Naughtin, GridNetworks has developed a peer-to-peer system to deliver HD-quality TV and movies at a lower cost than rivals. Competitors include Akamai and Limelight Networks.

The startup was founded by Jeff Payne, a former RealNetworks who told me in 2006 that the cost of delivering a 1.2-gigabyte movie through the system was only 25 to 50 cents. That price point, he said, could change the online video business.