John Malone's Liberty Global, the European cable operator, is in talks to acquire Intel's online pay-TV service under development, said three people with knowledge of the situation.

Mr. Malone would use Intel's system outside the U.S., said one of the people, who asked not to be identified because the talks are private. London-based Liberty Global owns Virgin Media in the U.K., and operates in Germany, Belgium and elsewhere. Negotiations are early and could fall apart, said the people, who declined to comment on the price being discussed.

Liberty Global's interest creates competition for the advanced set-top box being developed by Intel since at least early 2012. The chipmaker, which previously promised to offer service this year, wound up balking at making significant programming investments on its own, and began looking for partners. People with knowledge of the situation said last month that Verizon Communications was in talks to buy Intel's project.

Chuck Mulloy, a spokesman for Intel, declined to comment, as did Marcus Smith, a spokesman for Liberty Global.

European pay-TV services are rolling out some web-based features faster than in the U.S. In the U.K., BT Group began offering free access to premium sports programs for its broadband customers. Liberty Global's Virgin Media said in September it will offer Netflix's subscription-streaming service with its cable-TV package.

Mr. Malone, through his Englewood, Colorado-based Liberty Media Corp., holds stakes in pay-TV providers including Charter Communications Inc., the fourth-largest U.S. carrier.

Strategy shift
Intel, the world's largest chipmaker, hired Erik Huggers, a former British Broadcasting Corp. executive, to run its digital-media operations in January 2011 as the company sought to find new ways of delivering interactive content powered by its chips.

Mr. Huggers said in February that the company planned to start service this year. The product, called OnCue, is designed to give consumers access to content across TV sets, smartphones and mobile devices.

While Intel had planned to offer both live programming and a large library of on-demand video, Chief Executive Officer, Brian Krzanich, appointed in May, has focused on selling more mobile-phone chips.

The company decided to scale back its involvement in the pay-TV project earlier this year, and Intel began seeking partners with a base of internet subscribers or rights to films and TV shows, a person with knowledge of the situation said in September. By October, Mr. Huggers was reportedly vying for the open CEO spot atop Hulu; that post eventually went to a Fox executive with experience negotiating content deals with pay-TV companies.

"Key for us is going to be to have the content lined up so that it's a great experience, and then to have the right partners in place so we can scale it fast," Intel Chief Financial Officer Stacy Smith said in an Oct. 15 interview. "At the end of the day it's all going to be about getting those subscribers and those viewers."

~ Bloomberg News ~