Viewing hours of live OTT video is expected to overtake traditional broadcast TV, according to hundreds of industry pros who participated in a survey/study by Level 3 Communications, Streaming Media and Unisphere Research.

The 2017 edition of the annual OTT Video Services, based on answers from 486 “media industry professionals” (with 70% based in North America, 16% in Europe, 9% in Asia Pacific and 5% from South America), found that nearly 70% believe that OTT will cross that threshold no later than 2022.

The study also asked about the technical challenges faced by live-linear OTT services (see chart), and the most popular response, at 26.8%, was quality of service/quality of experience, followed by local ad insertion (14.5%), content security (13.3%) and network DVR/catchup services (10.3%).

“Engagement,” at 22.7%, was viewed as the most key performance metric used for OTT business decisions, followed by buffering (20.3%), latency/jitter (15.7%), abandonment rate and bitrate (time-weighted) (both at 14.2%) and video start failures (13.1%).

Notably, linear channel OTT content was rated as very important to OTT business plans by 42% of respondents, ahead of per-event and VOD content.

Respondents also offered insight on content delivery network strategies. About 47% said they use a multiple-CDN approach, up from 40% in last year’s study, and 30% had a single-CDN strategy, and 22% operated their own internal CDN.

“In-house CDN delivery presents a challenge for pure-play CDN companies, as they lack the ability to sell basic services such as IP transport that traditional telecoms can use to offset the cost of their CDN infrastructure,” the study  explained.

About half said they plan to offer both High Dynamic Range and High Frame Rate formats, with one-third saying they were uncertain about 4K or had no plans to support 4K.

Some 47% said they are not considering VR-focused video, but more than half said they are actively researching it, plan to launch a VR video service soon, or have launched on already.

Following rumors last week that a marriage was in the works, CenturyLink and Level 3 Communications announced Monday (Oct. 31) that they will merge in a deal valued at about $34 billion, including the assumption of debt.

Reports: CenturyLink Nears Level 3 Hookup

Under terms of the deal, Level 3 shareholders will receive $26.50 per share and a fixed exchange ratio of 1.4286 shares of CenturyLink stock for each Level 3 share they own. That, they said, implies a purchase price of $66.50 per Level 3 share (based on a CenturyLink $28.00 per share reference point), and a premium of about 42% based on Level 3’s closing share price of $46.92 on Oct. 26, 2016, the last trading day prior to speculation that a deal was in the works.

CenturyLink shareholders will own about 51% of the combined company, with Level 3 shareholders owning the balance.  They expect to close the deal by the end of third quarter 2017.

Among drivers of the deal, they said the combined scale will enable the companies company to deliver services  over a network that connects more than 350 metropolitan areas with about 75,000 on-net buildings. They expect the deal to achieve $975 million in annual run-rate cash synergies. 

They added that the deal will expand CenturyLink’s network by 200,000 route miles of fiber, noting that the additional on-net buildings include facilities in EMEA and Latin America. The combined company represents about $19 billion pro forma business revenue and $13 billion in “business strategic” revenue for the 12-month period ended June 30, 2016. About 76% of the combined company’s revenue will come from business customers. 

At close, Glen Post will continue to serve as CEO and president, while Sunit Patel, EVP and CFO of Level 3, will  serve as CFO of the combined company.  CenturyLink has also agreed to appoint four Level 3 Board members at closing, one of whom will be a representative of STT Crossing (a wholly owned subsidiary of ST Telemedia).

The combined company will be headquartered in Monroe, La., and keep a “significant presence” in Denver and other parts of Colorado, they said.

CenturyLink intends to finance the cash portion of the transaction and pay related fees and expenses through a combination of cash on hand at CenturyLink and Level 3, and approximately $7 billion of additional indebtedness.  CenturyLink has also received financing commitments from BofA Merrill Lynch and Morgan Stanley & Co. LLC totaling approximately $10.2 billion for new secured debt facilities, comprised of a new $2 billion secured revolving credit facility and approximately $8.2 billion of other secured debt facilities. 

"This transaction furthers our commitment to providing our customers with the network to improve their lives and strengthen their businesses,” Post said, in a statement. “It is this focus on providing fiber connectivity that will continue to distinguish CenturyLink from our competitors. CenturyLink shareholders will benefit from the significant synergies and financial flexibility provided by the combined company's revenue growth and strong cash flow. For employees, this combination will bring together two highly customer-focused organizations and provide employees growth and advancement opportunities the companies could not offer separately." 

“This is a compelling transaction for our customers, shareholders and employees," added Jeff Storey, president and CEO of Level 3. "In addition to the substantial value delivered to shareholders, the combined company will be uniquely positioned to meet the evolving and global needs of enterprise customers."

BofA Merrill Lynch and Morgan Stanley & Co. LLC acted as CenturyLink's financial advisors, and Evercore provided a fairness opinion. Wachtell, Lipton, Rosen & Katz and Jones Walker are acting as CenturyLink's legal advisors. Citigroup acted as financial advisor to Level 3, and Lazard provided a fairness opinion. Willkie Farr & Gallagher LLP acted as legal advisor to Level 3. Latham & Watkins acted as legal advisor and Credit Suisse acted as financial advisor to ST Telemedia.

Shares in Level 3 Communications rose almost 4% Wednesday amid a report that the company is seeking strategic options, including a possible sale.

Comcast is a potential suitor for Level 3, Bezinga reported, citing an unnamed industry source. Bezinga also pointed to a research note issued late last by Cowen & Co. analyst Colby Synesael speculated late last year that Comcast could pursue Level 3 to bulk up its enterprise business capabilities in order to expand competition with AT&T and Verizon.

Notably, Comcast Business launched a new initiative last fall that targets Fortune 1000 companies. Comcast Business pulled down $1.31 billion in revenues in Q1 2016, establishing an annual run-rate of $5.2 billion, with the bulk of that revenue still coming way of small business customers.

Comcast and Level 3 have been asked for comment.

Update: Level 3 said it doesn't comment on rumors or speculation. Comcast also declined to comment. 

Broomfield, Colo.-based Level 3 has a market cap of about $20.15 billion and serves customers in more than 60 countries.

Level 3 and Comcast also have a checkered history.

In 2010, Level 3 and Comcast quarreled over a contentious peering dispute, with Level 3 arguing that Comcast was erecting a “toll booth” on the Internet soon after Level 3 landed a deal to be a primary content delivery channel for Netflix streaming traffic. Comcast and Level 3 cut a new interconnection deal in 2015 aimed at maintaining ample capacity to exchange Internet traffic between their networks, and an agreement that seemingly put that previous bad blood behind them.