Intel Said to Seek Web-TV Service Partner in Shift

September 28, 2013 Leave a comment

Intel Said to Seek Web-TV Service Partner in Shift

Intel Corp. (INTC), shifting strategy for its planned Web-based television service, is now seeking partnerships to jumpstart the project, said a person with knowledge of the situation. The company may miss a stated goal of starting service by year-end, said the person, who asked not to be named because the plans are private. Intel, based in Santa Clara, California, is looking for a partner with a base of Internet subscribers or rights to films and television shows, the person said. Intel’s TV efforts have slowed under Chief Executive Officer Brian M. Krzanich, according to the person. The new CEO, who took the reins in May, has emphasized getting Intel chips into mobile devices. The shift in strategy for its TV effort reflects a view within Intel that the company, which has built an advanced set-top box, needs a partner with existing customers and marketing experience to be successful.“For Intel or anyone else to launch and pay the networks what they’re getting from the cable companies makes it a very difficult proposition,” said Bernard Gershon, a New York-based digital television consultant.

A spokesman for Intel declined to comment. The company is in discussions with online retailer Amazon.com Inc., which runs a pay-video service, and mobile-phone maker Samsung Electronics Co., the website All Things D reported, citing people familiar with Intel’s plans.

Web Competition

Drew Herdener, a spokesman for Seattle-based Amazon, declined to comment. Lauren Restuccia, a spokeswoman for Samsung in New Jersey, didn’t immediately respond to an e-mailed request for comment outside of business hours.

Intel has been working on a Web-based television product since at least early 2012. Erik Huggers, general manager of Intel Media, said in February that the company planned to start service this year.

Intel is trying to offer pay television through Web connections, creating new competition for incumbent providers like Time Warner Cable Inc. (TWC) and DirecTV. (DTV) The service would give consumers, who increasingly view TV on their own schedule, wherever they are, access to content across TV sets, smartphones and mobile devices. Intel plans to offer both channels with live programming and a large library of video-on-demand.

The company continues to negotiate for programming and may have agreements in place within weeks, according to the person. Progress toward a broader partnership may also be made during that timeframe, the person said. Contractual terms prevent a partnership with an existing pay-TV provider, the person said.

Sony, Google

Intel has been testing the service among employees as it seeks programming from media companies such as Time Warner Inc., Comcast Corp. (CMCSA)’s NBC Universal and Viacom Inc. (VIAB) The company had sought to build a service that would rank alongside DirecTV, the biggest U.S. satellite-TV service with more than 20 million subscribers.

Sony Corp. (6758), Google Inc. and Apple Inc. are also working on Web-based pay-TV services, which offer advantages in reaching younger viewers who are just as likely to watch shows from Netflix Inc. (NFLX) or Amazon.com on their smartphones as traditional TV linked to a set-top box.

An Internet TV provider would have to pay as much or more than cable and satellite services and offer a suite of channels, ESPN President John Skipper said at a press conference last month.

“We’re not going to offer one-offs,” Skipper said. The network includes the flagship channel, plus others such as ESPN2 and ESPN News.

Mobile Chips

Intel fell 1.2 percent to $23.41 at the close in New York. The shares have risen 14 percent this year.

Under Krzanich, Intel is devoting more resources to faster, more energy-efficient processors for smartphones and tablets. As people increasingly turn to mobile devices to surf the Web, send e-mail and watch video, the PC business is set to contract for a second straight year, dragging down sales at the world’s largest chipmaker.

“Intel was slow to respond to the ultra-mobile PC trends,” Krzanich said in a July conference call. “We have made several strategy and priority changes that will allow us to focus and win in that environment.”

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

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Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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