Intel offers to pay up for Internet TV programming deals
(Reuters) - Intel Corp'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.
Context & Ripple Effects
Intel's TV initiative had already moved from virtual-TV plans taking shape in 2012 to a proposed service and set-top box, but delays reported in January showed that securing the product was not simply a hardware exercise. The reported programming negotiations put content rights at the center of Intel's bid to enter pay television.
Reuters reports that Intel is offering up to 75% above traditional cable rates in advancing talks; that figure is attributed to people familiar with the talks, not a confirmed agreement.
First-order effects
- Intel faces a materially higher content-acquisition bill if the reported premium is required to win programming rights for its service.
- Media companies gain Intel as a prospective bidder whose reported offer sets a richer benchmark than traditional cable carriage rates.
Second-order effects
- Traditional cable distributors negotiating for the same programming may face pressure to defend renewal economics when a well-funded technology entrant is willing to pay more.
- Intel's planned box-and-service model becomes more dependent on converting exclusive or differentiated programming into subscriber revenue sufficient to support higher rights costs.
Third-order effects
- If technology companies continue entering pay TV by bidding above distributor rates, programming rights become a primary gatekeeper to distribution rather than an input that hardware scale alone can secure.
The trend: Intel's TV push is part of a broader contest in which technology companies seek direct consumer-media relationships but must first negotiate access to entrenched programming rights.