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Industry Vets Start Up ‘Next-Generation’ Cable Operator

Layer3 TV Lands $21 Million ‘A’ Round; Leadership Includes Ex-Comcast, TWC & Broadbus Execs 3/13/2014 4:25 PM Eastern

Layer3 TV, a startup that is being run by an executive team that includes the former chief technology officer of Comcast, announced an initial closing of a $21 million “A” round that will be used to fuel the development of a new IP-delivered video service that, it claims, will be friendly to traditional pay-TV business models.

A Securities and Exchange Commission filing dated March 6 cites a total offering amount of $25.07 million.

The round was led by North Bridge Venture Partners and Evolution Media Growth Partners, a joint venture of private equity firm TPG Growth and Evolution Media Capital (Evolution Media Capital is a J.V. backed by Creative Artists Agency, Hollywood’s largest talent agency, and TPG Capital). North Bridge partner Jamie Goldstein is joining Layer3 TV’s board of directors.

Billed as a “next-generation cable provider,” Boston-based Layer3 TV is keeping a relatively low profile and its specific plans hush-hush, though people familiar with it say its platform will support live TV, on-demand content and possibly DVR services.

Founded in 2013, the company describes itself as a “technology platform” that will deliver “a differentiated video consumer experience while fitting squarely within today’s programming and distribution paradigm.” The company has not announced any deals with programmers.

Cable Vets On Board

But it has execs running it that know a few things about the pay-TV business. Jeff Binder, Layer3 TV’s CEO, was the founder of Broadbus Technologies, a video server startup that was sold to Motorola in 2006 for $200 million. David Fellows, Layer3 TV’s CTO, most recently served as the CTO of Comcast and AT&T Broadband (sold to Comcast in 2002), and is considered one of the industry’s top engineering execs. Binder, Fellows and former Broadbus chairman and CEO Vin Bisceglia formed Genovation Capital in 2008 (Fellows and Binder are now former partners in the VC, though it was not immediately known what their current role at Genovation is).

Chuck Hasek, Layer3 TV’s head of video technology, most recently was the principal architect of video systems for Time Warner Cable; Eric Kuhn, head of marketing, previously ran social media for United Talent Agency and CNN; and Vic Odryna, head of product development, is a “serial entrepreneur” and the former CEO of Idea Arc and ZeeVee, a maker of digital video distribution products.

Layer3 operates a Twitter handle (@layer3tv). Its Linked In profile indicates that it has between 11 to 50 employees.

Cryptic Plans

Layer3 TV -- whose Web site carries the tagline, “Tomorrow’s Television Today” – is being cryptic about its product and its plans, but the startup is emerging as programmers continue to loosen up on distribution rights that enable over-the-top delivery. While Intel Media didn’t pull through with its plan to create a so-called “virtual” cable operator, instead selling its “OnCue” assets to Verizon, Sony plans to test an over-the-top subscription video service later this year. Earlier this month, Dish Network and The Walt Disney Company announced a new carriage deal that gives Dish the rights to distribute OTT video subscription packages.

People familiar with Layer3 TV say its approach, unlike what has been proposed by virtual MSOs, does not stray from the traditional programming business model.

“This is the antithesis of Aereo,” said one source, referring to the subscription broadband TV/cloud DVR service that relies on an array of tiny antennas and is battling it out in the courts with the nation’s major broadcasters. “This will be a programmer-friendly business model.”

Layer 3 also isn’t discussing its target market, though young, tech-savvy consumers who have either cut the cord or haven’t ever subscribed to pay TV would seem a likely place for it to point its pursuit. It’s also not clear if Layer 3 will compete directly with traditional cable operators, or if it will be open to MSO partnerships.

“They have a very different angle than others that might get put into that virtual MSO bucket,” said a person familiar with the company. “They are figuring out a new way of delivering a pay TV service.”

Layer3 TV also is not yet revealing its launch time frame and whether it will start off with a nationally-available service, or if it will begin at a regional or local level.

A Layer3 TV job post on the Web seeking a lead engineer—user experience describes notes that the company is “creating the IPTV platform of the future. We are looking for individuals who are passionate about changing the face of television and enabling consumers to engage with their TVs, tablets and other devices in ways that incite the imagination.”

Here’s a sampling of what else Layer3 TV and its backers are saying about the company and its aims:

“In today’s connected world the television is becoming more than just a lean-back experience – it is becoming the hub for state of the art technology in the living room,” Binder said, in a statement. “Layer3 TV merges the television experience with consumers' digital lives in ways that engage and enhance the programming and distribution eco-systems.  We intend on delivering that promise.”

“Massive consolidation in the cable industry has created a greater need for innovative startups to step out and lead,” added Fellows. “Layer3 TV’s technology aims to enhance the current eco-system, while providing consumers with simple, cool and technically advanced television solutions that can keep pace with the ‘Internet of things.’ This is key to creating significant value.”

“We are thrilled to fund a platform that will rethink how consumers engage in content for a social and digital age,” said North Bridge’s Goldstein.

“It was important for us to back a company that is programmer friendly. Layer3 TV is the right partner for the entertainment industry as they will enhance programmers’ existing business models and create new non-disruptive revenue streams while also delivering a compelling user experience to consumers,” added Rick Hess, founder and co-managing partner of Evolution Media Capital.

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