Intel Is Said to Weigh Sale of Online Cable TV Venture

It is possible that Intel will forge ahead with OnCue through a partnership with Verizon, or a pact with some other company, but a purchase by Verizon is most likely, according to the people, who insisted on anonymity because the talks were supposed to be private. A deal will most likely be struck by the end of the year.

OnCue, as envisioned by Intel, would take the traditional cable television bundle and make it more consumer-friendly by transmitting it via the Internet. The company’s technology has impressed many, but channel owners have been reluctant to make the necessary licensing deals, stirring speculation that Intel might not move forward.

The other big roadblock has been an internal one. When a new chief executive, Brian M. Krzanich, took over the company earlier this year, he expressed skepticism about the television project because it was not a core part of Intel’s business, and directed the project leaders to seek partnerships for it.

Earlier this fall Intel executives privately acknowledged that they would fall short of their widely publicized goal of introducing OnCue to the public in time for the holiday season.

A takeover of OnCue could position Verizon to sell a cablelike television service across the United States through existing broadband pipes or through its Verizon Wireless business. Its current eight-year-old television subscription service, FiOS, has five million subscribers and is growing steadily, but it is available in only about 15 percent of American homes because it is delivered over a proprietary fiber-optic network. Verizon said last year that it did not plan to expand that fiber-optic network much more.

But a Verizon television service could potentially reach many more people if it were not linked to the fiber-optic network and were made available through any broadband connection. Alternatively, it could be sold as an optional mobile TV upgrade for the Verizon Wireless unit’s roughly 100 million monthly subscribers.

Verizon is in the process of gaining full ownership of the wireless unit, having announced last month a $130 billion acquisition of Vodafone’s 45 percent stake. “We don’t comment on speculation,” a Verizon spokeswoman said on Wednesday after the online technology site AllThingsD published an article on the talks with Intel. An Intel spokesman declined to comment.

Sony and Viacom Reach Tentative Deal to Stream Cable Channels

The agreement is believed to be the first of its kind between a major programmer and any of the technology giants that are trying to disrupt traditional modes of TV delivery. If other programmers follow suit, Sony’s as-yet-unnamed service would let paying subscribers receive live cable channels the same way they use on-demand libraries like Netflix or Hulu. Intel and Google are working on similar services, but try to make it more user-friendly, perhaps the way Netflix does with personalization features and a fancy interface.

Most households today have only a few choices for television service: whatever cable company serves their local area, be it Comcast, Time Warner Cable or others, and two satellite providers, DirecTV and Dish Network. In some parts of the country, television through Verizon or AT&T is also available. Analysts say cable delivered through the Internet could give households many more choices — if the new services give customers more for their money and if cable incumbents don’t smother the services.

To even have a chance, companies like Sony and Intel need the permission of programmers, and that’s why the Viacom deal is considered a breakthrough. Although Viacom and Sony declined to comment on Thursday, a person directly involved in the negotiations confirmed a Wall Street Journal report about the agreement. The person insisted on anonymity because the companies were not prepared to comment on the record.

Having the news spread was advantageous for Sony, though, because having Viacom on board — even just on a preliminary basis — will most likely help the company complete other carriage deals. The company has also contacted other top programmers, like the Walt Disney Company and Time Warner.

That Viacom — which has more than 20 channels, including big ones like Comedy Central and small ones like Centric — was the first to agree to support Sony’s fledgling service is not necessarily surprising, since the company has a reputation for contentious relationships with cable and satellite companies. Last year, Viacom channels were blacked out in DirecTV households for nine days. Sumner Redstone controls both Viacom and the CBS Corporation, which is blacked out in three million Time Warner Cable households because of a contract dispute.

Time Warner Cable, and to a lesser extent other TV providers, has thrown up roadblocks for new entrants by inserting language into some carriage contracts that discourages programmers from selling its channels to Internet TV services. The existing providers say they just want to ensure that the upstarts don’t get better terms, like broader video-on-demand rights or cheaper rates for channels.

Most likely, Sony will pay higher rates — one of the downsides of being new and untested. Any deals between programmers and the Sonys of the world will keep the TV bundle intact, despite occasional public agitation for an “a la carte” option.

“I don’t think the classic pay TV subscription bundle model of television is going away anytime soon — it’s a pretty compelling and cost-efficient smorgasbord,” particularly for older Americans, said Tim Hanlon, a former media agency executive who now runs the Vertere Group. “But all bets are off with the under-40 set — the growing group of folks who just want their video content when and where they want it, preferably without the messy commitment part,” he added.

Sony is well-positioned to reach younger Americans because its PlayStation video game console is already hooked up to TV sets in tens of millions of homes. The company has said almost nothing about its intentions, but it has been interested in selling a bundle of channels at least since 2011. Its TV service could also be made available in the future via smartphones, tablet computers and other devices.

Sony hopes to start selling the service in the fourth quarter of 2013 or the first quarter of 2014, said a media company executive briefed on the plans for it.

If Sony’s service (or another one like it) gets off the ground, incumbents like Comcast, Time Warner Cable and Verizon are also likely to sell their own versions, furthering this new type of competition. What no one knows — but everyone in the industry wonders — is whether these Internet cable services will steal market share; entice people who do not currently pay for any channel bundle to sign up; or fail to sign up customers at all.

The overall number of American households paying for television has remained remarkably steady in recent years, though there are some slight signs of fraying around the edges. Mr. Hanlon said he sensed that as younger viewers were getting better at “cobbling together their own workarounds to all-or-nothing content packages,” the “smart programmers are starting to carefully position themselves to take advantage, just in case the classic carriage model starts to break.”

Of course, all of the alternatives being dreamed up in Silicon Valley and elsewhere are B.Y.O.B. — Bring Your Own Broadband. Video is data-intensive, and data caps or stiffer monthly charges for broadband imposed by companies like Comcast could inhibit the establishment of virtual cable services. In a recent interview, the departing Time Warner Cable chief Glenn Britt acknowledged as much when he was asked about Intel’s interest in TV.

“The reality is, if everybody watched TV over the Internet, and we were out of the TV business, then we would have to recover more money from the Internet service,” Mr. Britt said.

Time Warner Revenue Is Flat, Despite Cable Gains

The parent company of HBO, CNN, TNT and TBS reported revenue of $6.9 billion in the quarter that ended March 31, down 1 percent from the same period last year. Net income grew 23.5 percent to $720 million, or 75 cents a share, compared with $583 million and 59 cents a share in 2012.

“We’re off to a strong start in 2013, making us even more confident in our full-year outlook,” Jeffrey L. Bewkes, chairman and chief executive of Time Warner, told analysts. He specifically pointed to the success of the company’s cable TV business, driven this quarter by an average nightly audience of 10.7 million for the N.C.A.A. basketball tournament broadcast on several Turner channels.

But Time Warner’s legacy businesses continued to lag. Later this year, the company is expected to complete the spinoff of its Time Inc. publishing unit into a separate, publicly traded company. Revenue at Time Inc., which publishes Time, People, Sports Illustrated and InStyle, fell 5 percent to $737 million, reflecting an 11 percent dip in subscription revenues.

Time Inc. eliminated roughly 6 percent of its total worldwide staff of 8,000 in the first quarter, resulting in $53 million in restructuring and severance charges. “We remain very focused on taking costs out of the business,” said John K. Martin, chief financial and administrative officer at Time Warner. Cost cutting, he added, is “an important step in preparing Time Inc. to function as a stand-alone public company.'’

Revenues at the Warner Brothers studio fell 4 percent to $2.7 billion, while operating income increased by 23 percent to $263 million. “Both ‘Gangster Squad’ and ‘Jack the Giant Slayer’ fell below our expectations,” Mr. Bewkes said.

He remained optimistic about the studio’s slate of upcoming films, including “The Great Gatsby” and “The Hangover Part III.” Warner Brothers had a strong television season with “Revolution,” an apocalyptic drama on NBC, and “Game of Thrones,” the HBO fantasy series that averages 13.4 million viewers per episode.

Mr. Bewkes defended CNN under the leadership of Jeff Zucker, the recently named president of CNN Worldwide. But, he said, the channel still needed to evolve from a trusted source of breaking news to a more regularly watched outlet. “CNN can’t just be politics and wars,” Mr. Bewkes said.

He rebuffed questions about whether the HBO Go on-demand app would be made available on an à la carte basis through a broadband connection, making the premium cable channel more like the streaming service Netflix. “We would do it if we thought it was in our economic best interest,” Mr. Bewkes said. “At this point, we don’t think it makes sense.”

Winfrey’s Low-Rated Cable Channel Is Poised to Break Through

Ms. Winfrey conferred with the co-presidents, Erik Logan and Sheri Salata, about booking a trip to Mr. Armstrong’s hometown, Austin, Tex., reserving airtime for Thursday night and announcing the “get” to the press.

What no one said on the call was that this interview — maybe Ms. Winfrey’s biggest since her 1993 sit-down with Michael Jackson — could be a turning point for OWN, which has been low-rated since its birth two years ago.

Another turning point — perhaps even bigger — came this month when OWN started to pocket substantial per-subscriber fees from some of the biggest cable and satellite operators in the country.

Some of these deals were made before OWN even had its premiere. The operators agreed to pay just a penny or two per subscriber a month until January 2013, and then start paying nearly 20 cents a month on average, according to people with direct knowledge of the deals who asked for anonymity because the details were confidential. The fees increase over a span of several years.

Multiply those dimes and quarters across most of the 83 million homes in which OWN is available (but not all — at least one deal is still pending) and the value for Ms. Winfrey and Discovery Communications is plain. Discovery, OWN’s other owner, has said that the channel will turn a profit for the first time in the second half of 2013. Discovery has invested more than $400 million to date.

Paul Maxwell, who runs MediaBiz, a television industry reporting and consulting firm, said OWN was now where Discovery hoped it would be at birth. “They see a lot more to do,” he said. “But they think they’re on the right track now.”

The OWN story is a reminder that cable is a niche business, one built on serving loyal but often small groups of fans.

Ms. Winfrey remains just as well-known now as she was three years ago, her last full year hosting “The Oprah Winfrey Show” on local television stations, said Henry Schafer of Marketing Evaluations, a research firm that publishes proprietary Q Scores for celebrities. But her emotional connection to consumers is not nearly as strong as it was then.

Her Q Score — a combination of both traits — dipped to 22 in 2012 from 31 in 2010 among adult women. Although Ms. Winfrey remains above the average of 16, “she’s been out of focus for a while,” Mr. Schafer said.

Big scoops like the sit-down with Mr. Armstrong can bring her back, at least temporarily. OWN is trying to capitalize on the interview by spreading it over two nights, by raising advertising rates and by running some ads for other programs on the channel. To make sure people can find the interview, OWN is running Internet and print ads and promoting a channel finder tool.

“When Oprah does what you know she’s going to do — get the big gets — it just provides a big spotlight on all the good that’s been going on,” said Mr. Logan, who cited two successful reality shows, “Welcome to Sweetie Pie’s” and “Iyanla: Fix My Life,” and an Emmy Award for Ms. Winfrey’s “Super Soul Sunday.”

Success for OWN is relative. Last year, 325,000 people watched the channel on a typical night, 160,000 of whom were 25 to 54 years old. About 50 broadcasters and cable channels had a bigger audience. But OWN was up about 30 percent over its first year, 2011.

Publicly, the low point for the channel seemed to come in March 2012, when the channel decided to lay off 30 employees, about 20 percent of its work force. The layoffs and the cancellation of a talk show by Rosie O’Donnell helped the channel to save $50 million a year and achieve profitability more quickly.

Bits Blog: Time Warner Cable to Charge Modem Rental Fee

1:45 p.m. | Updated Adding more details about buying a modem.

Time Warner Cable, the big broadband and cable provider, is planning to start charging customers a monthly fee of $3.95 for renting a cable modem from the company. It said in notifications mailed to customers this week that the new fee would go into effect over the next two months.

Internet customers who want to avoid the monthly fee can purchase a modem of their own and have Time Warner Cable activate it. The company has published a list of approved modems on its Web site. The compatible modems cost between $50 and $137 on Amazon.com.

A message that Time Warner Cable mailed to customers.

Time Warner Cable lists two main types of modems that people can buy: Docsis 2.0, which works with lower-end, slower Internet services, or Docsis 3.0, for the more expensive, faster packages. For budget-conscious consumers who buy the $50 modem, it will take a year to break even.

But many consumers who are less tech-savvy are unlikely to go through the hassle of purchasing and installing their own modem, so the policy change will probably lead to a big boost in revenue for Time Warner Cable.

The company said the new fee was necessary to make up for the cost of distributing and replacing cable modems over time.

“As we continue to deploy more and more cable modems, many of these modems need servicing or replacing, get damaged and some are not returned,” said Justin Venech, a spokesman for Time Warner Cable.  “The monthly lease charge will allow us to service or replace the equipment as needed and helps provide a better user experience.”

Though most Time Warner Cable customers have not had to pay to rent modems in the past, these types of leasing fees are a common practice among Internet providers. Comcast, another broadband provider, charges a modem rental fee of $7 a month.