Bloomberg News

TiVo Gains After Reaching Settlement Pact With Verizon

September 24, 2012

TiVo Gains After $250.4 Million Settlement With Verizon

The TiVo agreement requires Verizon to make an initial cash payment of $100 million, followed by quarterly payments totaling $150.4 million through July 2018. Verizon also will pay monthly license fees for every Verizon DVR subscriber beyond a predetermined level. Photographer: George Frey/Bloomberg

TiVo Inc. (TIVO:US), the pioneer of digital- video-recording technology, gained the most in almost three weeks after Verizon Communications Inc. (VZ:US) agreed to pay at least $250.4 million to settle patent litigation.

TiVo shares (TIVO:US) rose 4 percent to $9.94 at the close in New York, the biggest advance since Sept. 4. The stock has risen 11 percent this year.

The agreement requires Verizon to make an initial cash payment of $100 million, followed by $150.4 million more, paid in quarterly installments through July 2018, TiVo said today in a statement. Verizon also will pay monthly license fees for every Verizon DVR subscriber beyond a predetermined level.

“We are pleased to reach an agreement with Verizon which underscores the significant value our distribution partners derive from TiVo’s technological innovations and our shareholders derive from our investments in protecting TiVo’s intellectual property,” Tom Rogers, chief executive officer of Alviso, California-based TiVo, said in the statement.

TiVo, which developed the first commercially available DVR, has struggled to capitalize on the invention over its 15-year life. The company has lost money in eight of the past 10 years.

Video Distribution?

The Verizon deal translates to $1.48 per diluted share for TiVo, according to Tony Wible, an analyst with Janney Capital Markets. The agreement also removes $10 million to $15 million in annual legal expenses, helping investors focus on the progress of the main business, he said in a report.

Another potential benefit for TiVo: the possibility of video distribution to TiVo DVRs. As part of the settlement, the companies are exploring video services through Verizon’s joint venture with Redbox.

Verizon and Redbox have been testing a streaming video rental service called Redbox Instant that is expected to deliver video in select markets by Christmas.

Separately, Verizon also settled today with CloudTV developer ActiveVideo Networks Inc. of San Jose, California, for $260 million, according to a statement.

ActiveVideo makes virtual set-top box applications that allow users to stream video to televisions and other devices. Verizon and ActiveVideo agreed to cross-license certain patents and to not sue each other for an unspecified number of years.

To contact the reporter on this story: Scott Moritz in New York at smoritz6@bloomberg.net

To contact the editor responsible for this story: Nick Turner at nturner7@bloomberg.net

The TiVo agreement requires Verizon to make an initial cash payment of $100 million, followed by quarterly payments totaling $150.4 million through July 2018. Verizon also will pay monthly license fees for every Verizon DVR subscriber beyond a predetermined level. Photographer: George Frey/Bloomberg Sept. 25 (Bloomberg) -- Brett Harriss, an analyst with Gabelli Co., talks about the outlook for Yahoo! Inc. and TiVo Inc. He speaks with Tom Keene and Scarlet Fu on Bloomberg Television's "Surveillance." Barry Ritholtz, chief executive officer of FusionIQ, also speaks. (Source: Bloomberg)

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Companies Mentioned

  • TIVO
    (TiVo Inc)
    • $14.09 USD
    • 0.24
    • 1.7%
  • VZ
    (Verizon Communications Inc)
    • $49.82 USD
    • 0.41
    • 0.82%
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