While TiVo creates amazing products and has successfully deployed their solution to numerous cable operators around the world, beyond patent litigation and licensing, they haven’t found much financial success. Basically, the writing was on the wall.
Whereas I see TiVo morphing into a Rovi should Bolt (retail) not take off and given Time Warp patent expiration in 2018.
— Dave Zatz (@davezatz) September 4, 2015
TiVo’s $1.1b purchase price isn’t quite as attractive as it appears… as the company’s sitting on about $500m of cash, after debt, according their latest call. Although, at potentially $10.70/share, it’s certainly a nice premium over the $8 they’ve been trading around much of the year. And Rovi clearly sees value in TiVo’s patent portfolio, beyond the soon-to-expire Time Warp tent-pole, including the active litigation against Samsung:
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 monetizing their innovations and intellectual property, with more than $3 billion in combined IP licensing revenues and past damage awards. TiVo’s IP assets, combined with Rovi’s recent OTT partnership with Intellectual Ventures, further strengthens the company’s collective position as a leading provider of intellectual property in media and entertainment discovery
So what’s next for us? Rovi indicates everything’s gonna be alright.
Rovi's John Burke on TiVo's retail business: "It will be a very important part of the business going forward."
— Mari Silbey (@msilbey) April 29, 2016
Despite the reassurance, I remain cautiously pessimistic ;) for a whole host of reasons related to Rovi’s business and TiVo’s ineffective retail execution… as evidenced by a largely stagnant retail subscriber count that mirrors 2007 numbers… despite padding the stats with TiVo Mini whole home extenders. But, while resurrecting a discontinued product with an inferior feature set may be seen as a misstep, it’s a surprisingly nice pivot for a cost conscious audience given what I know of the seemingly shelved Bolt OTA Aereo Edition.
In any event, deals like these take time to close and even longer to consummate. As such, I can’t imagine any widespread retail TiVo changes within the next year. At least none that weren’t already planned. So, if a new pro-level TiVo and other unidentified non-DVR hardware were (still) in play this week, they’ll remain in play for the near term. Whether or not you’re comfortable making a purchase, when the time comes, will be the question (that I will help you answer). On the service side, I expect our subscriptions to be safe for a long, long while. As in years. However, if or as the company de-emphasizes retail, software bug fixes, app development, SkipMode, etc are the sorts of things that would fall by the wayside.
The merged company will go by “TiVo” and the transaction is expected to be completed Q3. Good luck to us.