Bloomberg News

Intel Seeking Media Rights to Start Online Pay-TV System

March 13, 2012

A silicon wafer on display at the Intel Corp. booth at the International Consumer Electronics Show (CES) in Las Vegas on Jan. 13, 2012. Photographer: David Paul Morris/Bloomberg

A silicon wafer on display at the Intel Corp. booth at the International Consumer Electronics Show (CES) in Las Vegas on Jan. 13, 2012. Photographer: David Paul Morris/Bloomberg

Intel Corp. (INTC), the world’s biggest chipmaker, is considering creating an online pay-television service that works on TV sets, computers and mobile devices, according to three people with knowledge of the plans.

Intel reached out to media companies and cable channels about getting the rights to broadcast shows, said the people, who asked not to be named because the discussions aren’t public. Intel would sell a Web-connected set-top box capable of streaming TV and video-on-demand programming, the Wall Street Journal reported yesterday.

As proposed, the plan would let consumers get their shows on any Internet-connected device without subscribing to traditional cable and satellite TV services. The offering would mark the first new full-service pay-TV system since AT&T Inc. (T) and Verizon Communications Inc. (VZ) expanded into the market.

Intel’s inquiries are at an early stage, and it’s uncertain whether the company will gain the rights needed for the proposed service, the people familiar with the matter said.

Kathy Gill, a spokeswoman for Santa Clara, California-based Intel, declined to comment.

By seeking TV rights, Intel would be embarking on a difficult path for Silicon Valley companies. Apple Inc. (AAPL) hasn’t attracted a wide following for its Apple TV set-top box and considers the product a “hobby.” Google Inc. (GOOG), meanwhile, has struggled to get broadcast networks to provide content for its TV service.

BBC Executive

Intel hired former British Broadcasting Corp. executive Erik Huggers in January 2011 to lead its attempts to break into the home-entertainment field. The company’s interest in television is part of a strategy to expand beyond the personal- computer market -- Intel’s main source of revenue. Chief Executive Officer Paul Otellini is trying to encourage the use of Intel processors in a variety of devices, including automobiles and mobile phones.

While Google TV relies on Intel processors, the platform hasn’t met sales projections, limiting the chipmaker’s inroads into the market. Intel also supplies set-top processors to Comcast Corp. (CMCSA), the largest U.S. cable company, in a deal announced last June. In January 2011, Comcast acquired control of NBC Universal, whose properties include the NBC broadcast network, the USA cable channel and Universal Studios.

Intel shares fell less than 1 percent to $26.99 yesterday. The stock has climbed 11 percent this year.

To contact the reporters on this story: Andy Fixmer in Los Angeles at afixmer@bloomberg.net; Ian King in San Francisco at ianking@bloomberg.net

To contact the editors responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net; Tom Giles at tgiles5@bloomberg.net


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