Intel may alienate key programming partners with OTT service

Josh Wein

Intel (NYSE: INTC) is reportedly struggling to line up programming partners for its planned over-the-top TV service. The situation has apparently become so dire, the chip maker has sought help from technology companies that already have relationships with the media industry.

This is hardly surprising, but not for the reasons you might think. Logically, TV networks should want Intel--and anyone else with a similar product--to succeed in getting these services up and running. The more distributors there are in the market willing to pay premium rates for programming, the richer the networks will be.

But Intel's plans for a massive remote DVR system may have something to do with the company's recent reported struggles. Erik Huggers, who has been running the Intel team in charge of the TV service, told the Wall Street Journal earlier this year that the DVR system would automatically record every TV program and let subscribers watch them later.

This would be an a great consumer product. It would essentially turn the program guide into an on-demand menu for at least the past three days of TV. No more remembering to set the DVR or worrying about whether there's enough room left on it to record another show or movie. It would all just be there waiting.

It would also surely draw a lawsuit from the very same networks Intel is trying to court.

The networks have sued to stop customers and service providers from recording their shows at every opportunity, going back to the first video tape recorders. They sued to block in-home DVRs. More recently they sued and lost when Cablevision (NYSE: CVC) introduced a much more limited remote DVR system than the one Intel has discussed.

Cablevision won that battle in part because of its restraint. Cablevision's remote DVR customers must schedule their own recordings and manage their own storage, just as if the DVR was sitting next to their TV set. The only difference was the length of the wire that connected the DVR to the TV set, Cablevision argued. This line of reasoning paved the way for Aereo, another remote DVR service the networks have sued to block. Aereo's early legal victories prompted Alki David to fund a me-too product now called FilmOn X that has also drawn lawsuits.

Dish Network (Nasdaq: DISH) has also found itself in federal court defending the legality of its massive DVR, the Hopper. Though that device differs from Cablevision's, Aereo's and Intel's in that programs are stored locally, it illustrates how seriously content companies take their copyrights and how willing they are to sue even longstanding distribution partners.

In other words, any major network which signs up to supply programming to Intel is also probably signing up to sue Intel. And why would anyone want to do that? Why take on the cost, hassle and publicity of a lawsuit when it would be much easier to say "Thanks, but no thanks," when Intel comes asking to license content?  --Josh

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