Intel Has $2 Billion War Chest

Chip giant still sorting out financial details of programming pacts

Intel has committed at least $2 billion to TV programming licensing deals for its forthcoming broadband TV service, according to sources familiar with the chipmaker’s initiative, but so far it has failed to officially sign any major content companies.

Sources emphasized that the $2 billion figure spans multiple years — and does not represent an upfront or “year one” spend on content.

The company has agreements in principle with CBS, News Corp. and Viacom for the Internet-video service, and as a new entrant into the pay TV sector Intel has offered to pay a 50% to 75% premium over industry-average rates, Reuters reported Friday.

But none of them are officially completed because Intel must ensure all the deals are aligned, in terms of the rates and other terms and conditions, according to an exec familiar with Intel’s efforts.

“You can’t pay a different number to ABC than CBS,” the source said.

Intel and the media companies have declined to comment on the negotiations. An Intel rep said the company is “broadly engaged with content partners and believe we’ll have a strong offering in this area when we launch later this year.”

The launch the TV service the chip giant has established an independent unit, Intel Media, headed by former BBC exec Erik Huggers.

While Intel insists the Internet TV service is on schedule for launch later in 2013, aiming for sometime in the fall, if the company can’t land a critical mass of programming pacts, the debut could get pushed into next year.

Many in the TV biz are skeptical that Intel can shake up the pay TV landscape.

Intel Media’s vision is to deliver a next-generation television subscription service, delivered over broadband connections, that offers the same premium live and on-demand TV that’s available from cable, satellite and telco operators. But instead of trying to undercut the incumbents on retail price, the company aims to lure consumers with a more attractive user interface and personalization features.

The Intel Media service will include a purpose-built set-top box that includes a camera — with facial-recognition software — to be able to identify who’s watching TV at any given point to deliver targeted ads and other personalized content.

SEE ALSO: The Big Bet at Intel Corp. That Could Change TV

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