Verizon Communications has agreed to buy Intel Media, the broadband-delivered TV technology and service that the chip maker never launched, for approximately $200 million, according to multiple sources familiar with the transaction.
Originally, Intel was shopping the OnCue group for an asking price of $1 billion, then dropped that in half before arriving at the final price tag with the telco in negotiations that concluded late Monday, one of the sources said.
With the Intel Media group, Verizon is expected to launch an “over-the-top” TV service sometime within the next 12 months, according to sources. The telco also said it will use Intel’s Internet-based technology to deliver a next-generation FiOS TV service, which Verizon originally launched in 2005.
Intel Media, established as a discrete division, had been aiming to launch the Internet TV service before the end of 2013. But Intel CEO Brian Krzanich, who was appointed to the top job last May, decided that launching the service was too expensive — given that Intel, a new entrant into pay-TV, would pay programming rates greater than incumbent cable and satellite providers.
Krzanich early in the sale process settled on doing a deal with Verizon, in part because of the strategic fit with the telco’s existing video business and also to establish a broader relationship with the nation’s No. 1 wireless carrier, according to a source.
Verizon’s acquisition of Intel Media is expected to close in the next few weeks. The telco said it is extending employment offers to the roughly 350 people in the Intel Media unit, which will remain based in Santa Clara, Calif.