Intel offers to pay up for Internet TV programming deals

Intel’s talks to buy content from media companies for its new TV service are advancing, and the chipmaker is offering to pay as much as 75 percent more than traditional cable rates, people familiar with the talks said. But, Intel is yet to close any programming deals, said the sources, who requested anonymity because they were not authorized to comment.

CBS, commercial broadcasting television network in US and Viacom have reached agreements with Intel on certain details over how their content would be distributed on the service the chipmaker plans to begin later this year, one person familiar with the situation said. However, NBC Universal is continuing its talks with Intel but its negotiations are not as advanced others companies, said another source familiar with the matter.

Intel has moved substantially on subscriber fees it is willing to pay since the negotiations began, one source said. It has also suggested preventing viewers from skipping commercials on the first run of a show, said another source. Representatives for Viacom, NBC, CBS, ABC and Time Warner declined to comment. Media companies typically give better prices to operators with more viewers, such as large cable companies, and charge higher prices to smaller or newer entrants. Since Intel's TV service has yet to start, and therefore has no viewers, it can expect to pay a premium, all the sources said.

If the rumoured move comes true, then Intel will hold a higher stake in the internet TV service industry

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 ESPN. While it was not clear exactly what amounts Intel had originally offered for specific channels, sources said the 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. Intel said in February that it planned to compete with Apple, Amazon and Google and provide a set-top box and service that would offer live and on-demand programming.

Erik Huggers, the head of Intel Media, has said he plans to offer customers smaller bundles of content than those currently being offered by cable and satellite operators. While Intel has not said how much it plans to charge for its TV service, 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.

Intel sees the living room as a potential battleground, where its advanced chips, used in set-top boxes and to power "cloud" data centers, can give it an advantage and help set the standard for other home entertainment products.

Reuters