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Amazon Denies It Has Plans to Create an Over-the-Top Pay-TV Service

Internet retailer responds to Wall Street Journal report that Amazon has approached TV networks about licensing channels

Amazon.com denied a report that it was seeking to license TV channels to launch a broadband-delivered television service.

The e-commerce colossus has approached at least three unidentified entertainment companies about licensing TV channels for an over-the-top video service, the Wall Street Journal reported, citing anonymous sources.

But an Amazon rep said Tuesday that the company has no such plans. “We continue to build selection for Prime Instant Video and create original shows at Amazon Studios, but we are not planning to license television channels or offer a pay-TV service,” Amazon VP of public relations Drew Herdener wrote in an email.

So far, no virtual pay-TV service has launched in the U.S. — despite intense interest around the potential for such a service, designed to steal share from incumbent players.

Intel on Tuesday announced an agreement to sell its broadband-based television unit to Verizon Communications in a deal worth around $200 million, according to sources. Verizon says the acquisition of Intel Media — which never launched the service — will let it accelerate development of over-the-top services.

Sony, meanwhile, said this month at the 2014 International CES that it intends to launch a test of an Internet TV service in 2014. Others reported to be interested in the concept include Google and Apple.

One hurdle for such “virtual cable TV” services: A federal appeals court struck down the FCC’s Net Neutrality rules last week, which has led to speculation that Internet service providers will attempt to extract higher fees from companies like Netflix that consume significant amounts of bandwidth.

Amazon could “massively disrupt the TV ecosystem” with a service that could be run at essentially zero margin, functioning as a loss-leader to drive users toward online purchases, Janney Capital Markets analysts Tony Wible and Murali Sankar speculated in a research note last week. Amazon’s Prime $79-per-year free-shipping membership program provides unlimited access to streaming video — including original series from Amazon Studios — as a value-added offer to encourage shoppers to buy more products.

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