DISH Researching Hostile TiVo Takeover?


It’s been several years since TiVo initiated their patent lawsuit against DISH Network, but we’re finally reaching the endgame of what has been an epic chess match between the two companies. Between the he said/she said arguments that have played out in the press to the endless legal maneuvers by both camps, it has been a long and brutal battle for both. As a TiVo shareholder, I’ve certainly found the long delays especially frustrating.

In the latest development in this high stakes game, TiVo appears to have pinned Dish in a dangerous checkmate situation. With appeals quickly running out, Dish’s options are becoming increasingly limited. While things look pretty dire for Dish, they may try to play one more dangerous gambit before the game is up:

I believe DISH might try to buy TiVo.

While looking through my traffic logs, I came across a very interesting visitor. (pic above) In 2006, I wrote an article referencing a “poison pill” TiVo implemented in 2001. Since Google loves bloggers so much, my story somehow ended up near the top of the page for the search term TiVo poison pill. Given recent analyst chatter that TiVo could be an M&A target, I’m not surprised that people would be interested in taking a closer look at the nuts and bolts behind the agreement, but I was surprised at where my visitor was browsing from.

While there’s no way for me to know who exactly it was, someone at EchoStar’s corporate HQ’s spent nearly 25 minutes researching an article that I wrote on the topic. Their outclick took them to the legal document that contains all of the nitty gritty details on how the pill actually works. Now, there could be any number of explanations for why someone at Echostar would be interested in TiVo’s anti-takeover provisions, but the most likely one is that they’re interested in making some kind of play at TiVo.

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9 thoughts on “DISH Researching Hostile TiVo Takeover?”

  1. NICE observation!

    I also have an incoming search on ZNF with “tivo poison pill 2010″ keywords. It’s dated June 5th and I haven’t yet figured out how to mate that to a source host/ip via Google Analytics – anyone have any ideas?

  2. one guy at HQ looking a a corporate rights agreement does not make a takeover bid. nice detective work though. don’t you have anything better to do than look at logs?

  3. Lolz – What’s the point of having traffic logs if you’re not going to look at them? I actually came across the search result a bit by luck, just happened to be logging in and saw the poison pill search, since I had been thinking about the same issue a few days before it caught my eye.

    I agree, who knows what it means. Up to each of you to decide what you to make of it, but no denying that it’s interesting though :) FWIW – This search result isn’t the reason why I think Dish will make a play here. It does help to confirm my conspiracy theories, but my thesis is actually based on a lot of things that I didn’t even bring up in my post.

  4. yeah, I am stuck on the fact that DISH would have lawyers who would get the offiical docs and probably quite some time back analyzed the poison pill as part of a list of strategies to deal with TiVo suit.

    Hopefully at 500$ an hour the lawyers could come up with more than a google search. :)

  5. If DISH makes a bid for TIVO, what would be the price?

    So how much is DISH in for? No one knows for sure, but I can take a guess.

    I believe the court will order DISH to pay at least $300M. The additional fees would come from the period of mid 08 – present. (Fee of $1.25 per DVR per month determined by the jury. Multiplied by 3 because DISH is in contempt of court during this period.) With the latest $103M ruling, I estimate DISH will owe TIVO $400M.

    There is an outstanding injunction from the court, ordering DISH to turn off 4M – 7M boxes in the next 30 days. DISH was granted a stay by the higher appeals court, but this injunction puts DISH in a very bad spot. If DISH had to turn off millions of boxes, it could bankrupt the company. DVR users are most likely their highest paying subscribers. There is an enormous amount of pressure on DISH to do a licensing with TIVO.

    The jury assessed TIVO’s licensing fee at $1.25 per box per month. It is debatable whether DISH would have to pay fees on 4M or 7M DVRs (read the court transcripts). If DISH is faced with licensing deal or shutting off DVRs, TIVO will have enormous leverage to jack up the fee. My estimate is $3.75 per box per month.

    Low estimate: 4M * $1.25 => $60M per year
    High estimate: 7M * $3.75 => $315M per year

    Licensing fees for 5 years would range from $300M to $1.6B.

    If you believe my analysis, DISH is in for $700M-$2B over the next 5 years. As of 6/10/2009, TIVO’s market cap is $1.15B. So, DISH is probably thinking about buying TIVO for $1.5B – $2B.

    Personally, I don’t see DISH buying TIVO. If DISH put in an offer, I think Comcast would come in and outbid DISH.

  6. nice analysis cobra commander.

    i have a hard time w/the price too but tivo could be a good fit for sister company echostar technologies, which already offers STBs and some nice software to the pay TV industry. as for comcast paying anywhere that kind of price – i’d be shocked to see that considering comcast already has its own sizeable software groups. frankly i don’t think anyone would value tivo as high as dish now would…

  7. Beware of Dish when trying to cancel it because they will charge you to send there junk back to them, when they were the one’s that installed it.

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