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Intel reportedly is looking for $500 million for its Internet TV service and wants to finalize a deal by the end of the year.
According to a Bloomberg report citing unnamed sources “with knowledge of the process,” Verizon Communications officials already are contacting broadcast and cable channels to talk about programming for a streaming service, while Intel executives have also spoken to Samsung Electronics and Liberty Global about the giant chip maker’s OnCue service.
Intel wants to rid itself of the Internet TV service, which reportedly was spiked by CEO Brian Krzanich after he took over the top spot from Paul Otellini in May, but wants any deal not only to meet the asking priced but to include an agreement that Intel would supply the chips for the hardware, according to Bloomberg.
Intel had been working on its ambitious Web pay-TV initiative two years ago as part of Otellini’s efforts to expand the reach of the company into new markets in the wake of falling PC sales worldwide, which has impacted such companies as Intel, Advanced Micro Devices, Hewlett-Packard and Dell. The idea was to build an Intel-powered set-top box that enabled consumers to stream TV shows, on-demand content, live events and other services into their televisions and other devices via the Internet. Through the service, users would order and pay for the shows they wanted, without having to pay for content and channels they didn’t want.
The OnCue service would have put Intel into tight competition in the TV services market with the likes of DirecTV, Dish and Time Warner Cable, while also running up against such tech vendors as Apple, Google and Sony, all of whom reportedly are interested in developing Internet TV capabilities.
The chip maker had created the Intel Media business and had hired Erik Huggers, a former executive with the British Broadcasting Corp., to oversee the effort. Intel Media grew rapidly, with a staff at one point that numbered 300. Intel executives earlier this year said they expected to have the service online by the end of 2013, and had been testing it with thousands of Intel employees in their homes.
However, there were reports that Intel was having difficulty securing deals with programmers for content, and that the vendor was turning to Samsung and Amazon for help. In addition, Huggers reportedly was close to completing some content deals, but that TV programmers were demanding up-front payment that would have cost hundreds of millions of dollars, even if adoption of OnCue was slow.
In the end, Krzanich saw the Internet TV initiative as a too-expensive distraction that diverted money, effort and attention away from the efforts he wanted Intel to pursue, particularly with the company’s low-power Atom platform in the mobile space. The CEO made his feelings about OnCue known soon after taking over as CEO, saying the company was being cautious about the initiative.
“We’re experts in silicon, we’re experts in mobility, in driving Moore’s law,” he said in June, according to Reuters. “But we are not experts in the content industry, and we’re being careful.”