Layer3 TV to Launch in Chicago Soon, Backed by Altice and John Paulson (EXCLUSIVE)

Secretive cable TV upstart Layer3 TV is getting ready to launch in Chicago in the coming weeks, Variety has learned. Some of the money used to finance the launch comes from two previously unannounced investors: French telco Altice, through newly acquired U.S. subsidiary Suddenlink, and Paulson Co., the investment company of famed hedge fund investor John Paulson.

A Layer3 spokesperson declined to comment on unannounced investors, but confirmed plans to launch in Chicago soon. “After an oversubscribed trial run in Texas, we look forward to making the Second City first in cable,” he said.

Layer3 TV wants to compete with traditional cable companies by offering consumers a modern, 4K-ready set-top box, a DVR that records up to eight shows at the same time and no long-term contract obligations. The company launched a beta test under the Umio brand in late 2015 in Texas, and is now getting ready to enter a second market with its debut in Chicago.

Layer3 TV has started to hire sales representatives and other necessary staffers to prepare for its roll-out in the city, and targeted local consumers with banner ads like the one displayed above. Sources familiar with the company’s plans told Variety that a launch in the city is slated for the coming weeks.

Unlike in Texas, Layer3 TV is going to actually be using its company name as branding for the service in Chicago. The difference in branding is more than just a marketing exercise: For its launch in Texas, Layer3 TV actually teamed up with local incumbent Suddenlink. The cabler even founded a new subsidiary, dubbed SL3TV LLC, to run Umio.

Suddenlink’s partnership with Layer3 had long been a subject of speculation, but Variety has now learned that the two companies actually have been quite cozy with each other for some time. As part of the deal, Suddenlink even invested in Layer3TV, sources confirmed.

The TV upstart has raised a total of $100 million in equity and debt financing to date. The company previously disclosed North Bridge and Evolution Media Partners as investors. Variety has now learned that in addition to Suddenlink, the company has also gotten money from John Paulson’s Paulson Co., which has in the past held large stakes in media and telco companies like Time Warner Cable, Cablevision and T-Mobile.

Both the investments as well as the launch in Chicago have some interesting implications for the company. Chicago is a unique market for Layer3 because it’s the first city where the company will actually have to take on a powerful incumbent: Many of the city’s TV households are being served by Comcast, which has been in the process of migrating its customer base to newer DVRs as well.

However, Chicago also has more competition that other U.S. cities, with local cabler RCN and AT&T also serving customers. More competition means more switchers, so it may be easier for Layer3 to convince customers to say goodbye to their existing cable company.

Suddenlink’s tie-up with Layer3 on the other hand got even more interesting in recent weeks. Last year, Suddenlink got acquired by European telco giant Altice, which quickly followed by snapping up Cablevision as well, and combining both companies under the Altice USA umbrella. At least in theory, this could open up an opportunity for Layer3 to one day also target customers in Charter’s footprint.

Layer3 executives have said in the past that they wanted to be in multiple markets this year. The company itself is located in Denver, which could be a natural next step. However, Layer3 TV is also hiring installation technicians in Virginia, hinting at plans to launch in the state as well.

Popular on Variety

More Digital

  • A view of the SK Telecom

    Korean Regulators Approve Four-Way Streaming Merger

    South Korean regulators have approved the merger of the video services of three local broadcasters and SK Telecom’s streaming app Oksusu. The new service, operating under the name Wavve will launch in September and be Korea’s largest. Proposed in January as a measure to combat the incursion of international video players, the deal was given [...]

  • siriusxm on playstation

    SiriusXM Announces $4 Streaming Plan for Students

    SiriusXM took another step towards taking its subscription service past the car Tuesday: The company announced a new student subscription tier that gives eligible college students access to music and talk radio stations on their mobile and connected devices for $4 per month. Some of the content available for this price includes SiriusXM’s more than [...]

  • Mission - Impossible - 1996

    Stan Australian Streamer Inks Content Deal With Paramount

    Stan, the Australian streaming video firm owned by Nine Entertainment, has signed a content supply deal with Paramount Pictures. The multi-year agreement adds to Stan’s line up of arrangements with Hollywood suppliers that already includes MGM, Disney, and Lionsgate. Subscription video has taken off hugely in Australia, where there are now an estimated 12.3 million [...]

  • Good Boys Movie

    ‘Good Boys’ Again Tops Studios’ TV Ad Spending

    In this week’s edition of the Variety Movie Commercial Tracker, powered by the always-on TV ad measurement and attribution company iSpot.tv, Universal Pictures claims the top spot in spending for the second week in a row with “Good Boys.” Ads placed for the comedy had an estimated media value of $4.42 million through Sunday for [...]

  • Janice Lee

    Asian Streamer Viu Adds Wattpad Development Deal

    Multi-territory Asian video streaming service Viu has struck an original content deal with tech-driven story firm Wattpad. Together they aim to develop film and TV series under the Viu Original label. Canada-based Wattpad hosts a vast library of user-generated stories, with a claimed user base of 80 million, including 22 million in the Asia Pacific [...]

  • Oculus Go Product Shot

    Former Oculus Head of Mobile VR Max Cohen Leaves Facebook

    Early Oculus staffer Max Cohen, who at one point led mobile product for the VR unit, has left Facebook this week, Variety has learned. Cohen’s departure is just the latest staff defection for Facebook’s VR team, which recently also lost its head of VR product, Oculus co-founder Nate Mitchell. A Facebook spokesperson declined to comment. [...]

  • YouTube logo

    YouTube Reportedly to Stop Targeting Ads in Videos for Children

    YouTube is finalizing a plan under which it would no longer serve targeted ads in videos that are popular with kids, Bloomberg reported, citing anonymous sources. The move is intended to appease U.S. regulators that have been investigating whether YouTube violated privacy laws that prohibit online services from collecting data on children, according to the [...]

More From Our Brands

Access exclusive content