Rovi, TiVo Try to Bridge Difference on Valuation

  • Companies said to discuss value of intellectual property
  • Deal would merge the two set-top box software manufacturers

Rovi Corp. and TiVo Inc. are seeking to resolve differences over valuation and intellectual property, as the digital entertainment companies continue active merger talks, according to people familiar with the matter.

The companies are quibbling about the long-term value of their patents, said the people, who asked not to be identified because the discussions are private. TiVo and Rovi are less than 10 percent apart on valuation, one of the people said. No deal is imminent, and the planned transaction may still fall apart, the people said.

Rovi has a market capitalization of about $1.5 billion, while TiVo is valued at about $902 million. The deal would be structured as a combination of cash and stock, one of the people said.

A representative for Tivo declined to comment. A spokeswoman for Rovi didn’t immediately respond to requests for comment.

Much of TiVo’s value to Rovi derives from intellectual property related to its development of digital video recording devices, or DVRs. TiVo successfully settled several patent infringement lawsuits over the devices in recent years, including with Alphabet Inc.’s Google, Cisco Systems Inc. and Dish Network Corp.

Rovi isn’t shy about using the courts to protect its patents, either. It’s currently suing Comcast Corp. for infringement relating to features in Comcast’s X1 video platform. Rovi has also sued Amazon.com Inc., Hulu LLC and Netflix Inc. over patent-infringement claims.

TiVo Shares

TiVo shares have fallen about 17 percent over the past 12 months. The Alviso, California-based company hasn’t named a permanent chief executive officer since Tom Rogers left the top job in November, while staying on as non-executive chairman.

Tivo has long fought cable providers, including Comcast, to sell its boxes directly to consumers within bundled offerings. Comcast prefers to build its set-top box software on its own, using proprietary technology.

Rovi, based in Santa Clara, California, holds the patents for TV programming guides and products that are licensed to cable companies and others such as Sony Corp. and Google. It was formed through the 2008 merger of Macrovision and Gemstar and officially changed its name the following year.

Chairman Andrew Ludwick was ousted in May after activist investor Glenn Welling’s Engaged Capital, which owns 2.7 percent of Rovi shares, criticized the company’s strategy and performance. Engaged Capital won two board seats in a proxy fight that added Welling as a director. The New York Times reported Welling pressed Rovi to merge with Tivo last month.

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