T-Mobile has signed a deal to acquire Layer3 TV, the Denver-based multichannel video programming distributor (MVPD) that has launched pay TV services to a handful of markets.
Financial terms were not announced, but the agreement will enable T-Mobile to enter the pay TV arena and take on incumbent cable, satellite and telco TV providers as well as a slew of new “virtual” MVPDs such as DirecTV Now, YouTube TV, Sling TV, fuboTV, Philo, and PlayStation Vue. T-Mobile said the deal, expected to close in the “coming weeks,” is not expected to impact company financial guidance or expectations.
With Layer3 TV in-hand, T-Mobile said it intends to “launch a disruptive new TV service in 2018,” adding that its LTE network will be at the “heart” of T-Mobile’s mobile video strategy. More specific details on pricing and packaging were not announced, though T-Mobile said the coming TV service will take advantage of its national retail presence, brand, and its sales and customer care organizations.
For its part, Layer3 TV has centered on an IP-delivered, full-freight home pay TV service that has integrated a batch of OTT offerings and enabled 4K video capability on every set-top it deploys. Among other strategies, Layer3 TV has offering a pay TV/broadband bundle in Washington, D.C., under a resale agreement with Verizon Communications
Layer3 TV has not announced subscriber numbers, but the service is currently available in Los Angeles; Chicago; Washington D.C.; Dallas/Ft. Worth; and Longmont, Colo., and has announced plans to extend service to New York. In Longmont, Layer3 TV is teamed up with NextLight, a Colorado-based municipal provider, via a marketing/technology relationship.
UPDATE: Layer3 TV tweeted today that it also has plans to bring its service to San Francisco and Philadelphia.
Founded in 2013, Layer3 TV has raised about $100 million. Investors include Altice (which just struck an MVNO deal with Sprint), Evolution Media, Paulson and Company, and North Bridge Venture Partners.
T-Mobile will be introducing its twist on pay TV amid a small but growing cord-cutting trend that has been eroding the subscriber bases of incumbent pay TV providers.
RELATED: Decline of Traditional Pay TV Accelerates in Q3
And, in making that announcement, T-Mobile CEO John Legere served up some sharp-tongued criticism of those providers.
“People love their TV, but they hate their TV providers,” Legere said in a statement. “And worse, they have no real choice but to simply take it – the crappy customer service, clunky technology and outrageous bills loaded with fees! That’s where we come in. We’re gonna fix the pain points and bring real choice to consumers across the country,” said John Legere, president and CEO of T-Mobile. “It only makes sense for the Un-carrier to do to TV what we’re doing to wireless: change it for good! Personally, I can’t wait to start fighting for consumers here!”
“No market needs Un-carrier-ing more than pay TV, so we’re completely stoked to join T-Mobile in disrupting the status quo!” added Jeff Binder, CEO of Layer3 TV. “Together with T-Mobile, we’re going to ditch everything you hate about cable and make everything you love about TV better.”
The sale represents another M&A exit for a company started up by Binder. A VOD technology pioneer he founded, Broadbus Technologies, was sold to Motorola in 2006 for about $186 million.
T-Mobile also posted a video from Legere about the proposed acquisition: