Intel Corp. (INTC) is making progress in talks with Time Warner Inc. (TWX), NBC Universal andViacom Inc. (VIAB) to obtain TV shows and films for a first-of-its kind online pay-TV service, according to people with knowledge of the situation.

Intel, the world’s largest chipmaker, is negotiating financial terms with the companies, according to the people, who sought anonymity because the talks are private. The media companies have signed off on the broad outlines of the proposed service, they said, with some aspects still to be settled. Other network owners aren’t as far along, the people said.

Networks such as Time Warner’s CNN, NBC’s USA Network and Viacom’s MTV would give Intel critical mass to offer consumers an alternative to established pay-TV services. Using its own set-top box, Intel plans to offer an online product this year, Erik Huggers, Intel’s vice president for media, said last month. That would represent new competition for incumbent operators like Comcast Corp. (CMCSA) andDirecTV. (DTV)

Intel is betting it can create a more flexible service, delivered through consumers’ broadband accounts, that gives subscribers more choices over the channels they receive and offers an easier-to-use electronic programming guide, Huggers said. The service would offer live channels and on-demand programming.

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