Verizon Courting Liberty To Make Joint Offer For Intel Media’s ‘OnCue’ Assets: Source

But John Malone & Company Said To Need More Convincing
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Verizon Communications is “seriously considering” buying the assets of Intel Media’s OnCue over-the-top video platform and is pressing Liberty Media to join the deal, a source familiar with the matter told Multichannel News.

AllThingsD reported in late October that Intel and Verizon were in “advanced discussions” about such a deal in late October, but those talks have apparently been heating up.

Liberty Media chairman John Malone has been reluctant to go in on the deal with a telco, the source said, in part because of his ties to the cable industry through Liberty Global and Liberty Media's 27% stake in Charter Communications.

“Liberty has been a very tough sell,” the source said, noting that chairman and CEO Lowell McAdam is trying to set up a meeting with Malone to re-pitch the idea and attempt to change Malone's mind about making a joint play for the OnCue assets.

Verizon declined to comment on the latest round of speculation. Liberty and Intel were not immediately available to comment on Intel Media’s M&A plans involving the OnCue project, which has had trouble securing the programming distribution rights necessary to create a compelling subscription video product.

But getting Liberty to come along is just one factor that Verizon is considering as it weighs a bid for OnCue, another source said, noting that Verizon’s interest in the assets is not necessarily to enable it to offer subscription video services outside of FiOS TV’s current footprint, but to help the telco establish an equivalent to X1, Comcast’s new cloud-based platform.

Verizon is analyzing whether to build or buy that capability, the source said. But its apparent interest in teaming with Liberty on a bid suggests that Verizon is hesitant to pay price that Intel Media is asking for the OnCue assets.

This is the second time Liberty has come up in the OnCue discussions. In September, a source said Intel Media had engaged Liberty in talks about forming a partnership that would involve financial backing while also giving the project with some much-needed validation. Those inquiries generated “zero interest” from Liberty, the source said.

And it’s difficult to see what motive, if any, Liberty would have in making a joint purchase of OnCue. Liberty Global is already pushing forward on a next-gen, cloud-based version of the user interface for its new Horizon video platform that would use the Reference Design Kit, the pre-integrated video software bundle for set-tops and gateways that’s being managed by Comcast and Time Warner Cable. Charter Communications, meanwhile, is getting ready to test out a cloud-based UI in Ft. Worth, Texas, in anticipation of a mid-2014 deployment.

Amazon, Samsung and Netflix are among other companies that have reportedly been approached by Intel Media about OnCue.

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