Wireless carrier Verizon may announce the acquisition of Intel's Internet-based pay-TV startup, OnCue, this week.
OnCue provides pay-TV programming over high-speed Internet connection giving competition to cable-TV services that deliver shows over dedicated lines restricted by territory. The web-TV service includes servers, set-top boxes and software, which can stream media content to televisions, tablets as well as smartphones.
Verizon is currently the second-largest communications company in the U.S. With the purchase of OnCue, Verizon can extend its pay-TV offering outside the geographical footprint of its FiOS fiber-optic service. OnCue's acquisition also means that Verizon will see a boost in its data traffic.
"It has the potential to change U.S. pay-TV forever," said Andy Hargreaves, an analyst with Pacific Crest Securities in Portland, Oregon. "Untethering the linear video service from the network could dramatically increase competition."
A Wall Street Journal report cites sources familiar to the deal and indicates that Verizon may pay less than $200 million to purchase OnCue. Intel had hoped to fetch around $500 million from the sale of the web-TV service.
New York-based Verizon is also believed to have contacted media companies to check if a streaming product would require new contracts for programming, or whether the current FiOS TV agreements can be altered to contain the additional rights.
Intel's Internet-based TV service plans were unveiled by the company in 2012 and the services were expected to start by the end of this year. The company initially planned to build and then operate OnCue itself. However, Intel backed off from the web-TV service under the leadership of its new CEO Brian Krzanich, who succeeded Paul Otellini in May. Krzanich will be focusing more on revitalizing the company's efforts to win orders from mobile phone and tablet manufacturers.
Neither Verizon nor Intel have commented regarding the speculated deal.
Shares of Verizon Communications closed up 0.88 percent at $48.26 on the NYSE on Monday.
