Folks are bringing up all sorts of things (e.g. fee vs. donation, insertion of donation appeals in the video stream, etc.) which, as far as I know, the judge didn't comment on in his ruling. Now, who knows, those things might be problems too but the judge just didn't bother dealing with them because he found one issue that disqualified Locast's non-profit status and then stopped there.
The specific thing the judge found is that, as a non-profit, Locast could only spend the money they collected on retransmission of TV signals in a given area but Locast was instead using some of that money to expand operations to new areas.
Now, who knows, if it hadn't been that issue, maybe he would have gotten into the question of whether the repeated interruption asking for $5 constituted a request for a donation or amounted to a requirement for a subscription fee. Although I don't know why the latter would necessarily mean that Locast wouldn't be a non-profit. Seems to me like it would be OK for them to completely cut viewers off after 15 minutes if they hadn't paid their share of the operational costs Locast incurs to deliver service, so long as the total fees taken in an area were roughly equal to the ongoing operational costs there, and none of the fees were taken out of the organization or used for anything other than running the service in that area.
But the bigger questions involve copyright issues -- does the law that Locast was relying on allow for the unauthorized retransmission of OTA TV signals over the internet? The internet didn't exist when that law was drafted and passed. Prior to Locast, it had only been used to cover nonprofit repeater TV stations that extend another station's signal further out into rural areas that would otherwise be unserved. This was always the big question about the legality of Locast, which hopefully gets answered in a future appeal.