Garth Ancier advises Intel on virtual-MSO plan

Tech giant taps TV biz vet to help set deals with content companies

Hollywood and Silicon Valley may be worlds apart, but Intel Corp. is relying on a TV-biz veteran to bridge the gap.

Sources say former BBC Worldwide America CEO Garth Ancier has been serving as the face of the chip manufacturer in boardrooms at all the major content companies to advance Intel’s ambition to launch a bundle of Internet-delivered TV channels that would rival offerings from cable and satellite operators.

A spokeswoman for Intel confirmed Ancier is working in an advisory capacity to the Intel Media Group but declined to specify what he’s working on or what that division is doing. Ancier did not respond to inquiries for comment.

But Ancier is playing an instrumental role in the deployment of a set-top box powered by Intel processors capable of transmitting high-definition channels. The Santa Clara, Calif.-based company is hoping to be first to market with the still-unnamed product before others reportedly working on their own so-called virtual MSO plans, including Sony, Apple and Google.

The virtual MSO model involves packaging a tier of linear TV channels and delivering them to consumers via broadband without the geographic restrictions that confine cable operators.

It makes sense for a company like Intel to turn to an executive like Ancier. He has a well-stocked Rolodex, having worked in prominent posts at many different media companies over the past several decades including NBC, Fox, the WB, Turner Broadcasting, Sony and Disney. In his most recent full-time stint, he spent three years at BBC Worldwide America ending in early 2010.

Having a familiar face like Ancier at the negotiating table could prove useful for Intel given historically frosty relations between the tech and content industries. He could serve as something of a translator between the two worlds, educating Intel on the intricacies of the TV business — a skillset many of the tech firms trying to outmaneuver Intel have been knocked for lacking.

Companies from Google to Apple have been accused of failing to respect the value or copyright of content, a criticism that may partly explain the struggles of Google TV, which launched weakly last year without access to broadcast content. Speculation has already begun on how stingy media companies could get with Apple in support of the highly anticipated TV set, unofficially dubbed “iTV,” rumored to be in development.

Intel isn’t exactly a newcomer to Hollywood given its chips have long provided piracy protection for digital distribution. But this new product marks a major departure for a company best known for back-end technology.

Ancier was brought in by fellow BBC alumnus Erik Huggers, who joined Intel last year as head of Intel Media Group after leading the Beeb’s digital media division.

Intel hasn’t made clear what its intentions are since the closure last October of its digital home group, the division that created the chips that powered an early iteration of Google TV. Huggers was shifted to then newly formed unit Intel Media Group, which is charged with delivering some kind of programming experience for smart TVs, though the company has never confirmed reports that first surfaced in March that it has settled on a virtual-MSO strategy.

While Ancier took a lead role in establishing relationships between Intel and content companies, sources say his involvement going forward is purely in a consulting role. But he’s brought in various business affairs and legal execs with media-company experience capable of getting complicated carriage deals done.

There’s going to be plenty of work for them to do if they’re to going to meet Intel’s goal of launching in test markets by Christmas with even a few channels in place. Though Intel is talking to everyone, it is said to be far from any finished deals.

That speaks to the difficulty of doing any carriage agreements, which can take years to nail down. Add in the complexities of coming to terms on an entirely new business model, one that can’t violate the most-favored-nation clauses in place that prevent programmers from giving Intel any advantage over top MSOs like Comcast.

And while the company has pockets deep enough to afford the multibillion-dollar pricetag for entering the multichannel video business, steep programming costs will likely keep Intel from charging consumers anything less than incumbent services.

As if getting deals that provide any edge over the cable operators isn’t difficult enough, consider that the broadband connections Intel’s strategy relies on are largely controlled by the very same cable operators.

No doubt Intel is keeping an eye on the debate over network neutrality, the principle that broadband providers can’t give preferential treatment to any one source of data. But recent allegations that Comcast is doing just that has given pause to other potential market entrants considering a virtual MSO, like Sony.

Even if Intel engineers an incredible product, it faces a tough market to crack given that the incumbents seem to be recovering from a sluggish 2011 with two consecutive quarters of modest growth. MSOs added 422,000 video subscribers in the first quarter of the year, according to Bernstein Research, on top of the 243,000 added in the fourth quarter of last year.

Despite all the obstacles, Intel execs are said to believe that its competitive edge lies its ability to deliver a seamless TV experience across an IP connection with little of the bugginess or buffering that plagues similar products.

Still, even if they can make their aggressive Christmas deadline, they may still be beaten to market by Verizon and Redbox, which announced in February their intent to launch an unspecified video venture, also expected to be a virtual-MSO play, in the second half of the year.