Not Virtual MSO? 'Next-Gen Cable' Service

Layer3 TV, a secretive “next-generation cable provider” startup founded by a group of cable-industry veterans, has landed $21 million in initial financing, led by North Bridge Venture Partners and Evolution Media Growth Partners.

Evolution Media Growth Partners is a joint venture between private-equity firm TPG Growth and Evolution Media Capital. Evolution Media Capital is an investment-banking firm affiliated with CAA.

What Layer3 is up to, exactly, remains a mystery, but the core of the service will include live TV and on-demand programming. Asked what the mission of the company is, CEO Jeff Binder said, “It really is to build a next-generation cable provider. We know where the industry stands today.”

The company specifically rejects the “virtual MSO” label, and is apparently cooking up a novel way to distribute video to the home that doesn’t use the Internet. The over-the-top virtual MSO idea, which has been pursued by Intel and others, essentially recreates subscription TV service and delivers it over the Internet. Dish Network is exploring a virtual pay-TV offering, too, and has landed distribution rights from Disney for such a service.

By contrast, Layer3 positions itself as a developing a new category of Hollywood-friendly service that nobody has attempted before. When asked if Layer3 was assembling a virtual pay-TV service, Binder responded, “We are a next-generation cable provider.” He refused to elaborate or provide more details on the model.

SEE ALSO: Disney Deal Gives Dish the Rights for a Virtual-MSO Foray

Layer3 has huge ambitions. The company is based in Boston, but has requested $2.9 million in job tax credits from the state of Colorado, with plans to create 321 new jobs in Denver paying an average wage of $92,083, according to the Denver Post.

The company will be “programmer friendly,” according to Rick Hess, co-managing partner of Evolution Media Capital, which he formed in 2008 as a partnership with CAA. “Layer3 TV is the right partner for the entertainment industry as they will enhance programmers’ existing business models and create new, non-disruptive revenue streams, while also delivering a compelling user experience to consumers,” he said in announcing the firm’s investment.

Layer3 TV, in announcing the funding round, described itself as “a technology platform delivering a differentiated video consumer experience while fitting squarely within today’s programming and distribution paradigm.”

There’s some kind of social-media angle, too: The platform “will rethink how consumers engage in content for a social and digital age,” said North Bridge partner Jamie Goldstein, who joins Layer3 TV’s board of directors.

For now, details of Layer3’s ambitions remain vague.

The founding exec’s backgrounds skew heavily toward the cable biz. Binder, former partner at VC fund Genovation Capital, founded VOD systems company Broadbus Technologies, which was acquired by Motorola in 2006 for $200 million. Layer3 chief technology officer Dave Fellows, also previously a Genovation partner, was CTO at both Comcast and AT&T Broadband.

In addition, Layer3’s crew includes head of video technology Chuck Hasek, previously principal architect of video systems for Time Warner Cable; marketing head Eric Kuhn, previously with United Talent Agency and CNN; and Vic Odryna, head of product development, formerly CEO of Idea Arc and ZeeVee.

The company’s name is a reference to the layers in the seven-layer network protocol architecture — with Layer 3 representing the network-routing layer.

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