Why Pace May Be Thinking About Buying TiVo

Mari Silbey —  October 30, 2013

TiVo Pace acquisition speculation

Ever since set-top manufacturer Pace picked up Aurora Networks for $310 million last week, the cable industry has been abuzz over who the company could target next. While speculation is all over the map, Jeff Baumgartner has homed in on two possible acquisition candidates. SeaChange International is one, thanks largely to its video backoffice solutions and advanced advertising technology. TiVo is the other.

There are several reasons why a TiVo purchase (or merger) could make sense. Logically, Pace wants to compete with top dog cable vendors Cisco and Arris, but to do that it needs software solutions for the TV market. Cisco bought NDS for its UI technology last year, and Arris is swimming in guide software between the Moxi assets it picked up from Digeo, and the DreamGallery product it brought in through the purchase of Motorola.

While TiVo is still known as a hardware company, the DVR maker’s business is as much focused on user interface software today as it is on set-top sales. That’s something Pace could use.

Pace has also partnered with TiVo already. Alaskan cable operator GCI rolled out a Pace gateway with the TiVo UI in August, and Mediacom, the eighth largest cable operator in the country, has plans to do the same. Not to mention, at the Cable Show, Dave stumbled upon Pace hardware, running the TiVo experience, and paired with a Charter-branded TiVo remote.

Finally, TiVo has made no secret of its strategy to drive more revenue through the cable market. As of today, the company’s cable subscriptions already account for the largest part of its business. In August, TiVo reported a total of 3.6 million cable subscriber customers.

Common wisdom has it that Pace isn’t done on the M&A front. And TiVo certainly isn’t done with cable. It could be that the two are a perfect match. Adding fuel to the fire… a rumor that company execs held potential tie-up talks at a Florida luxury hotel last month.

12 responses to Why Pace May Be Thinking About Buying TiVo

  1. Maybe they can make TiVo finally finish the HD ui… *smacks head*

  2. +1/Like

  3. I don’t think Tivo would sell to a nobody. It’s going to be google, msft, amazon or someone like that IMHO

  4. tivoboy, Pace isn’t a nobody in the industry TiVo has decided to focus on. Would have been interesting to see TiVo acquire Motorola’s cable business – wonder how much thought they gave that. But I’m also not sure they’d sell to Pace. Given their massive bank account and incoming settlement payments, I’d guess more of a merger if anything came to pass.

  5. do TiVo execs make good income out of TiVo?
    if yes – then they are not looking to sell given their stack of cash
    if No – then these rumors hold more weight

    now of course mergers to gain even more of a market is a whole nother ballgame

  6. Well, companies talk all the time. Never know where things will land. And most talks go nowhere. As far as TiVo execs making money, TiVo’s CEO is up to $11.5 million in compensation a year along with a large supply of stock (that’s seen a nice, recent bump). But I can’t tell you if he’s been worth it or if he’s satisfied with the numbers. All I know for sure is his teenage son was a Tebow fan.

  7. “I don’t think Tivo would sell to a nobody. It’s going to be google, msft, amazon or someone like that IMHO”

    The obvious acquirer is Intel to boost their OnCue project, due for release any day now…

  8. @chucky, you’re being sarcastic right, Intel has abandoned that project recently based on recent reports

  9. “chucky, you’re being sarcastic right”

    I’ll leave that judgment up to you, dear reader.

  10. Okay, Pace makes about 50% of their overall revenue in North America, and its the largest growing segment. Europe second, but shrinking.

    I suspect Pace is selling a lot of CHEAP STBs to North American carriers. If they bought TiVo it would be to try and climb up the ladder to compete with the likes of Cisco and SA in the DVR space. They are already doing whole home things with DirecTV though…

  11. Lets hope that Tivo’s consumer market doesn’t suffer the same fate as Moxi. This news is kind of worrisome.

  12. Agreed – the real danger here is that Tivo would be bought up for the intellectual property (i.e. patents and software), not for the retail hardware. Pretty much what happened when Arris bought out Digeo and the retail Moxi was discontinued. Given that Tivo doesn’t make money in the retail market, it’s not farfetched that Pace would do the same.