Verizon Ramps Up In TV, Buys Troubled OnCue And The Rest Of Intel Media From Intel

As Verizon gears up to report its quarterly results later today, the company has jumped a little deeper into the TV services pool. It has acquired Intel Media, a group of cloud TV assets that includes the OnCue Clould TV platform — widely considered a failure for never getting off the ground, leading Intel to see a buyer. Terms of the deal have not been disclosed but were reportedly in the range of $500 million when the deal was being reported in November 2013.

The move comes at a time when Verizon continues to see declines in its traditional fixed-line voice business — that’s the trend that drove carriers like Verizon over to building out enhanced broadband services like its FiOS TV service in the first place, and those trends show no sign of abating.

But it also raises the question of whether Verizon will be able to use and fly with what Intel has created, when Intel has not. Although Intel Media, led by BBC and Microsoft veteran Erik Huggers, in 2012 high hopes of launching a set-top box and cable TV service, by autumn of last year there were already reports of a deal being brokered between Intel and Verizon for the unit, which never really got its services off the ground — largely, it seems, because of problems securing programming deals to pad out the technology with actual content.

It’s notable that analysts already are asking if Verizon will miss on estimates. That implies that Verizon may have put the news out to offset some of what may be coming up ahead.

The deal follows another couple of other large, recent moves into TV and content distribution from Verizon — including acquiring content delivery network Edgecast for more than $350 million. It also included the acquisition of UpLynk for uploading and encoding video.

Intel Media includes 350 employees, and the acquisition will include all IP related to the OnCue platform. The 350 employees will continue to be based in Santa Clara with the management team — led by corporate VP and GM Erik Huggers — intact.

“We’re incredibly proud of what we’ve achieved. Intel provided us with the technological know-how and resources to develop products and services that will fundamentally change the way we experience TV, and now Verizon gives us access to the marketplace and the ability to scale,” Huggers said in a statement. “It’s the next logical step, and we’re excited about the road ahead.”

The deal is expected to close in Q1 2014.

The important thing here is that what Verizon is trying to do is to add on more features and technology to differentiate FiOS from the rest of the pack of paid TV services — in this case helping with search and discovery, interactivity and multiscreen services.

“The OnCue platform and team will help Verizon bring next-generation video services to audiences who increasingly expect to view content when, where and how they want it,” said Verizon CEO Lowell McAdam. “Verizon already has extensive video content relationships, fixed and wireless delivery networks, and customer relationships in both the home and on mobile. This transaction provides us with the capabilities to build a powerful, capitally efficient engine for future growth and innovation. We will have the opportunity to enhance, expand, accelerate and integrate our delivery of video products and services to better serve audiences on a wide array of devices.”