Verizon to purchase Intel’s Media division

Intel's OnCue TV service may finally see the light of day. The chipmaker has announced that Verizon will acquire its Media division, taking with it the division's intellectual property, products, and employees. In a press release, Verizon CEO Lowell McAdam laid out plans to incorporate the product into its FiOS TV services while also offering an over-the-top experience that might allow Verizon to expand its reach—without incurring the expense of expanding its fiber optic network.

Intel's project was led by television industry veteran Erik Huggers and revolved around an IPTV service that would provide a nearly à la carte experience. Search and discovery features were among the key features of the service, but content distributors were hesitant to sign on to a system that would disrupt their comfortable relationship with cable companies. After taking over as CEO, Intel's Brian Krzanich expressed doubts that his was the right company to see this project through; Intel was reportedly seeking $500 million for the division.

For Verizon's part, its FiOS home television and Internet service has grown considerably, but high costs and a noncompete agreement with the largest cable companies have kept it from aggressively expanding the service's coverage area. That noncompete clause may soon expire, though, as it was tied to a spectrum purchase that has since been completed and a joint venture that was recently dissolved. If Verizon is to renew its efforts to expand and market its FiOS service, having a differentiating feature like OnCue might go a long way. Further, if Verizon is able to offer the same OnCue service in a set-top box over a competitor's wires, it could gain customers with minimal capital expense.

It's unlikely that Verizon would agree to the purchase if it weren't certain that its existing content partnerships would carry over into the new product. First, though, the usual regulatory hurdles have to be met before the sale is completed; it is expected to be finalized by the end of this quarter.