Comcast Corp, the No. 1 U.S. cable operator, is in advanced discussions about licensing its "X1" video operating system to Cox Communications, the third-largest cable operator, according to people familiar with the matter.
Comcast Chief Executive Brian Roberts said on January 7 that the company is looking to license its latest cloud-based technology to other cable operators. Comcast has been in talks to provide Cox with a "white label" version of the product without using Comcast's Xfinity product name, two sources said.
The sources would not speak on the record because the talks were private.
The X1 technology platform has a search function that combines shows and movies from live TV, library and content from digital video recorders. It also has an interface that is considered to be the most advanced in the cable industry, featuring Internet applications, viewing recommendations and voice control.
The video product being licensed would use Comcast's software, but would be customized to work within Cox's cable system.
Georgia-based Cox Communications is a unit of Cox Enterprises and has 4.5 million video subscribers.
An agreement is not yet final so it was not clear when the two companies would have a deal in place, or how many Cox subscribers would have access to the product.
Representatives for Cox and Comcast declined to comment.
Comcast has invested about $2 billion in building its cloud-based platform, said Brean Capital analyst Todd Mitchell. Licensing its wares and collecting fees from other operators would help generate additional revenue from the investment.
Mitchell said Comcast and Cox could also save money by using the same technology because they could buy products from the same vendors.
John Malone, the chairman of Liberty Media Corp who is driving cable industry consolidation in the United States and Europe, has been calling on Comcast to share its technology with smaller players to help them compete against the satellite and telecommunications industry. Cable companies serve different markets and do not directly compete with one another.
(Reporting by Liana B. Baker in New York; Editing by Ron Grover and Andre Grenon)