Qualcomm to Spin Off MediaFLO?

by Cassimir Medford on 06 February 2008, 11:47

Categories: Media - Communications - Finance
Topics: discovery , qualcomm , Thailand , Netherlands , MediaFlo , joe nordgaard , Cassimir Medford , Neville Meijers

 
Is Qualcomm planning to spin off or even sell MediaFLO, its mobile TV subsidiary? Experts see signs that the mobile chip maker, which has entered and exited businesses related to its core in the past, may be getting ready for a divestment encore.

San Diego, California-based Qualcomm, which has committed $800 million to its U.S. mobile TV network, this week hired TV veteran Neville Meijers as the new senior vice president and general manager for MediaFLO Technologies.

Qualcomm is also one of the major participants in the U.S. auction of radio spectrum being surrendered by TV stations in the country's switchover to digital TV, so it has an opportunity to enhance MediaFLO's bandwidth and value.

"Mobile TV is not really part of Qualcomm's core business as much as it is an enhancement of it, and one of the key indicators of a spin-off is having the right talent on board to run it as a standalone business," said Joe Nordgaard, director of wireless consulting firm Spectral Advantage.

A tightly focused engineering shop, Qualcomm in the past has entered and exited both the mobile handset and the base station markets in an effort to enhance its core CDMA business. In 1999 Qualcomm sold its base station business to Ericsson and its cell phone manufacturing operation to Kyocera.

The TV business with its complex interrelationships among international content owners, networks, broadcasters, and regulators, is even further removed from Qualcomm's core business than either the handset or base station businesses, so a spin-off is highly likely, Mr. Nordgaard said.

Mr. Meijers has worked in the TV business for about 15 years starting in South Africa in 1993. He then worked in the emerging digital TV markets in both the Netherlands and Thailand.

He subsequently ran the Asia Pacific region for cable and satellite TV channel Discovery before moving to Discovery's head office in the United States.

"The fact that I have a lot of global experience across a number of different pay-TV operators makes a perfect fit for MediaFLO," Mr. Meijers said. "I am hoping to use that experience on both the content and operator side to bring about growth opportunities for MediaFLO."

Mobile TV will be a challenge for Qualcomm. The market has emerged very slowly in most of the world, but it has been practically glacial in the U.S., where MediaFLO operates as both a technology provider and a network owner.

After three years of trying, U.S. mobile TV service providers managed to attract about 1.7 million customers by the end of November 2007, according to research firm M:Metrics, and that represents less than one percent of all U.S. mobile service subscribers.

MediaFLO has significant cost  and frequency advantages compared to other technologies such as DVB-H, but the mobile TV business will take a lot of time to emerge, according to Mr. Nordgaard. And a slowly-emerging business remotely related to Qualcomm's core business may be better off as a spin-off.