Former Global Crossing CEO Bets On Streaming Video

By Jessica Toonkel | NEW YORK

(Reuters) -- The founder of former telecommunications company Global Crossing Inc, Gary Winnick, has acquired a majority stake in live streaming concert service Qello - the first step in creating a new company and technology platform to capitalize on the surge in online TV consumption, Winnick told Reuters.

Winnick said the company, which will keep the name Qello, is aiming to provide the technology for video streaming services and has approached Viacom and MGM Studios Inc as content partners. Eventually, he will broaden the offering beyond television to enable companies in the music, healthcare and education industries to launch the streaming platform.

Gary Winnick

Winnick is entering the "over the top" online video streaming space as companies like Walt Disney Co, 21st Century Fox and Time Warner Inc acquire firms or build platforms to serve viewers abandoning traditional cable to watch their favorite shows online.

Qello, which was acquired for an undisclosed sum, will be the backbone technology for the new company, Winnick said. Qello runs Qello Concerts, and provides the tech platform for Acorn TV, an online streaming service for British shows owned by RLJ Entertainment.

In 2017, 700,000 U.S. households will cut the pay TV cord, pushing the total number of cord-cutting households to 7.4 million, according to data firm Emarketer. But Winnick’s path will not be easy as new players in streaming technology are popping up every month. In January, Comcast Corp's NBC and Turner announced plans to help sports leagues and networks live stream sports.

"It's like back in the day when everyone headed to California thinking they were going to find gold," said Mio Babic, chief executive of iStreamPlanet, an online video streaming platform that is majority owned by Turner.

The decision to take a stake in Qello also comes months after Disney took a $1 billion minority stake in BAMtech, a technology company spun off from Major League Baseball's digital media company MLB Advanced Media (MLBAM). BAMtech provides the streaming platform for such entities as Worldwide Wrestling Entertainment and HBO. Disney holds the right to purchase the remaining stake and many industry executives expect it to follow through.

Winnick, who built Global Crossing into a $48 billion company and sold shares worth $734 million before it went bankrupt in 2002, ultimately expects to grow the new company with other services incubated through venture capital investments by his company, Winnick and Company.

Despite the competition, there is an opportunity for a new entrant to come into the space, said Dave Morgan, founder and CEO of ad tech firm Simulmedia.

"Not much of the telecommunications infrastructure or services were built to support what we are seeing as an emerging one-to-one personalized video streaming service on demand," he said.

Winnick is not looking to compete with BAMTech and has no plan to go after its customers, he told Reuters. While BAMTech is becoming more of a rights owner, Winnick said he wants to focus on being a pure technology provider for programmers.

For Winnick, the over the top video space is what the telecommunications area was before the internet fully took hold in that the web opened up new businesses and competition in the sector.

"I see a major disruption in the works and we want to be one of the leaders of that disruption," he said.