After weeks of speculation, investors learned this week of Rovi Corp’s plans to acquire TiVo for about $1.1 billion.
The new company – which will adopt the TiVo name – combines two media and entertainment technology players with complementary products, services and intellectual property assets. The company will continue to be led by Rovi CEO Tom Carson.
“Rovi’s acquisition of TiVo, with its innovative products, talented team, and substantial intellectual property portfolio, strengthens Rovi’s position as a global leader in media discovery, metadata, analytics and IP licensing,” said Carson.
“It’s an exciting time as the media and entertainment landscape undergoes a significant evolution. The combined capabilities of TiVo and Rovi place us in a tremendous position to extend services across platforms and to a customer base that includes traditional, over-the-top and emerging players across the globe. By working together, Rovi and TiVo will revolutionise how consumers experience media and entertainment and at the same time build value for our stockholders.”
TiVo’s market persona has always been centered on the user experience and content discovery, via middleware that brings together traditional television, OTT and on-demand content into one experience across devices. Rovi’s strength meanwhile lies in programming guides, personalisation, advertising, analytics and cloud services, along with patent licensing.
This latter point may be the biggest piece of synergy in the deal. Together, Rovi and TiVo have worldwide portfolios of over 6,000 issued patents and pending applications worldwide. Both Rovi and TiVo have been successful in monetising their innovations and intellectual property, with more than $3 billion in combined IP licensing revenues and past damage awards. In April, Rovi filed a patent suit against Comcast.
Rovi and TiVo also have an overlapping customer set, especially on the pay-TV side, both in the US and around the world. But, the deal will add more than 10 million TiVo-served households to Rovi’s current base of approximately 18 million households using Rovi guides worldwide.
To capitalise on the greater scale, the new TiVo will offer an analytics platform dedicated to media and entertainment, helping service providers and media companies strengthen consumers’ connections to content. TiVo’s unique cross-device viewership data merged with Rovi’s analytics tools will enable better targeting of media spend, improved advertising inventory yield and the creation of targeted advertising capabilities for service providers, advertisers and media companies. That data also will enhance Rovi's Operator Insights and Subscriber Analytics tools to give service providers more visibility and more precise methods to improve customer retention and manage churn.
The combined company will have more than $800 million in revenue after purchase accounting adjustments, and the management said that it expected to realise at least $100 million in annual cost synergies, with 65% of those synergies recognised in the first 12 months.
“We’re proud of TiVo’s strong innovation history and of the ongoing efforts of our team to provide best-in-class products for our loyal consumer and service provider customers,” said Naveen Chopra, interim CEO and CFO of TiVo. “This transaction is the culmination of those efforts and the logical next step for TiVo. In joining forces with Rovi, our customers, employees and stockholders will benefit from being part of a more diversified industry leader with significantly greater market opportunities. Our combination creates a more influential global player with a commitment to product innovation, which will be incredibly well positioned to redefine television.”