TiVo in merger talks with Rovi: sources

Mar 24, 2016, 12:22 PM EDT
TiVo logo.
(Source: Gregor Smith/flickr)

TiVo is siad to be in merger talks with Rovi, according to sources.

The New York Times reports:

TiVo, the digital video recorder company that popularized the DVR and revolutionized “time shifting” and fast-forwarding through advertising, is in advanced negotiations to be sold to Rovi, according to people briefed on the talks. The deal would merge TiVo and Rovi, which is one of the largest owners of patents for digital entertainment devices. Shareholders of TiVo would receive a combination of cash and stock, these people said, though the exact price was still being negotiated. After the deal, shareholders of TiVo, which has a market value of $750 million, would probably own about 30 percent of the combined company, these people said. Rovi’s market value is about $1.7 billion. The transaction would end the independence of TiVo, a perennial takeover target that included a raft of speculated suitors: Apple, Google and Microsoft among them. Rovi, a lesser-known company, may win the prize that is TiVo as a result of an activist investor. Glenn W. Welling of Engaged Capital successfully won two seats on the board of Rovi last year. Since then, he aggressively pushed the company to revaluate its strategy and pressed it to seek a merger with TiVo, these people said.

Reuters notes:

TiVo shareholders would likely own about 30 percent of the combined company. TiVo's set-top boxes are in high demand from cable users as they also allow access to online video services such as Netflix, Hulu and Google Inc's YouTube. Up to Wednesday's close, TiVo's shares had fallen 28.6 percent in the past 12 months, while Rovi's had fallen nearly 9 percent.

Variety writes:

If consummated, the deal would bring together TiVo — which has shifted its business to selling software and hardware to pay-TV operators, away from retail sales of DVRs — with Rovi, a supplier of interactive program guides, entertainment metadata and related products to cable and satellite operators, consumer-electronics makers, media and entertainment firms, and Internet companies. Rovi says it has more than 5,000 issued or pending patents worldwide, with intellectual-property licensing representing 54% of its total 2015 revenue. Rovi, dating back to predecessor company Gemstar-TV Guide International, has aggressively pursued licensing deals and litigation for its patent portfolio. TiVo also has a sizable patent portfolio, including key patents related to DVR functions, and says it has won $1.6 billion to date from IP litigation. The company has 533 patents granted and 298 patent applications pending. TiVo last September sued Samsung, alleging Samsung DVRs, mobile devices and related software infringe its patents; the case is preliminarily scheduled to go to trial in March 2017.