Rovi is now moving forward into advanced talks to acquire TiVo, according to sources.
Though it’s not as well-known to the public as its rumoured acquisition target, Rovi, which is one of the largest owners of patents for digital entertainment devices, has a market value of about $1.7 billion, to TiVo’s $750 million. Sources have now told the New York Times that shareholders of TiVo would receive a combination of cash and stock, and retain a 30% stake in the combined company, though an exact price was still being negotiated.
In the past, Apple, Google and Microsoft have pursued the company, famed for pioneering the DVR concept, to no avail. But Rovi has an activist investor, Glenn Welling of Engaged Capital, who controls two seats on the Rovi board and who sources said was pushing hard for this merger.
For one, the two companies would have more than 6,000 issued or pending patents. For another, Rovi, in addition to its patent licensing business, specialises in interactive programme guides and TV content discovery. Rovi is installed for about 18 million TV subscribers worldwide, which made up just shy of half of the $526 million in revenue the company had last year. The addition of TiVo would give it an automatic path into a large global install base.
But, TiVo has struggled of late, despite continuing to ink deals with pay-TV operators to act as their set-top-box provider. It has also been a leader in personalisation. Yet, TiVo’s DVR market share remains below 2%, according to Leichtman Research.
“They set the fuse to DVR but in many ways, they were not the beneficiaries of it,” Bruce Leichtman, principal analyst at Leichtman Research, told the New York Times. “Consumers made their decision; they saw this as a feature but not as a product.”
TiVo is in the process of searching for a new chief executive, after Thomas Rogers stepped down from the post in November. Company CFI Naveen Chopra is acting as the company’s chief executive on an interim basis.