Intel Has $2 Billion War Chest for Internet TV Programming Deals; For this New TV Service Intel is Willing to Pay Up to 75% More for Programming Than Cable Operators

Jun 10, 2013  •  Post A Comment

"Intel has committed at least $2 billion to TV programming licensing deals for its forthcoming broadband TV service, according to sources familiar with the chipmaker’s initiative, but so far it has failed to officially sign any major content companies," reports Todd Spangler in Variety.

The story continues, "The company has agreements in principle with CBS, News Corp. and Viacom for the Internet-video service, and as a new entrant into the pay TV sector Intel has offered to pay a 50% to 75% premium over industry-average rates, Reuters reported Friday."

The Reuters story, by Ronald Grover, Liana B.Baker and Noel Randewich, adds that Intel "has also suggested preventing viewers from skipping commercials on the first run of a show, said another source."

The Reuters  story also says, "SNL Kagan, a research firm that measures and publishes the average subscriber fees cable and satellite TV operators pay for television networks, recorded last year’s highest fees were $5.15 per subscriber per month and were charged by Disney’s ESPN.

"While it was not clear exactly what amounts Intel had originally offered for specific channels, sources said the tech company was basing its 50 to 75 percent premium on listed average SNL Kagan subscriber fees. Intel needs deals with the top five or six U.S. media companies to secure most of the popular TV channels, according to one source."

The article in Reuters also notes, "While Intel has not said how much it plans to charge for its TV service, [the head of Intel Media, Erik] Huggers has billed it as a premium product, rather than a cut-rate option for consumers hoping to save money by canceling their cable subscriptions. Higher prices for consumers would give Intel breathing room to pay more to media companies without sacrificing its own margins."

The Reuters story also quotes an Intel spokesman saying that the company "still plans to launch its TV service this year."

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