Unable To Find A Better Exit, Qualcomm Cancels Consumer-Direct FLO TV

(Update: Qualcomm (NSDQ: QCOM) has now confirmed our report that is canceling FLO TV)

Qualcomm is shutting down its struggling direct-to-consumer FLO TV operations, paidContent has learned. According to sources familiar with the situation, the staff was informed late last week by Bill Stone, president of MediaFlo and FLO TV, that the mobile TV service will wind down by the end of the year. The company is in discussions with AT&T (NYSE: T) and Verizon about the future of its white-label wholesale service, which continues for now and includes the majority of its TV customers.

Qualcomm CEO Paul Jacobs acknowledged the consumer service’s problems earlier this summer and suggested the company might be better off focusing on using its spectrum and network to distribute other content. This shift places the emphasis on leasing the network, not programming for it.

I reached out to several Qualcomm executives late Sunday and again this morning for comment but have not yet heard back.

Jacobs told paidContent in June that Qualcomm has always planned to sell or spin off MediaFlo but insisted then that a shutdown wasn’t in the plans. In July, Jacobs told investors Qualcomm was exploring options. This move may make it easier to manage a sale or spin of the remaining part of FLO TV.

Jacobs also insisted then that if the service can’t succeed, it won’t be a total loss. “The spectrum itself is worth almost $2 billion based on the latest spectrum auction.”

That may be comforting when it comes to dollars overall but it doesn’t make FLO TV less of a failure or MediaFlo so far less disappointing. Founded in 2004, the costly mobile TV venture attracted Verizon and AT&T as distribution partners but has been hampered by limited availability on devices and an inability to achieve full distribution. It launched direct-to-consumer FLO TV in 2008 but the marketing message was muddy and consumers weren’t as interested as the company thought in acquiring a separate device and paying a subscription for mobile TV.

Access to content wasn’t the issue: FLO has the major broadcast nets, CNN, ESPN (NYSE: DIS), Discovery and more. But Jacobs said the company misjudged interest in episodic viewing compared to snacking on video content. The possible exception to interest in long-form mobile viewing, he said: live sports.

FLO expanded to other devices, including DVD players and a version for cars. But competition also expanded with mobile VOD subscription services like Netflix (NSDQ: NFLX) and Hulu Plus, and access to substantial video on the iPhone, iPad, Android and RIM (NSDQ: RIMM).

The FLO TV store is offline but I saw devices for sale Sunday in Best Buy. I’m told Qualcomm is working out the details now to compensate current customers.