Rovi Seeks to Jettison Online Video UnitCompany Acquired Movie Download Service With Sonic Solutions Deal in February 2011 1/03/2013 12:21 PM Eastern
Rovi announced that it intends to sell its Rovi Entertainment Store business, which powers Best Buy’s CinemaNow online movie download service, citing its “ongoing strategic efforts to focus the company on growth opportunities related to its core enabling technologies and services.”
Rovi completed the $720 million acquisition of Sonic Solutions in February 2011. Sonic Solutions’ RoxioNow broadband video platform was renamed the Rovi Entertainment Store. In addition to Best Buy, the company had announced a deal with HP for the white-label video download service.
In announcing the decision, Rovi president and CEO Tom Carson said the company is aligning “primarily around delivering enabling solutions for our service provider customers and using those efforts to also generate growth with our consumer electronics and other customers.”
"The Rovi Entertainment Store has grown significantly since Rovi acquired it in February 2011, and we believe it will continue to grow and provide an excellent platform for on-demand media delivery as retailers and content owners move to distribute more content online," Carson said. "However, we are working to drive Rovi's future growth and increase operational efficiencies around a strategic plan building on our core assets and IP, and to ensure the management team is fully focused on that effort. "
Rovi said it has retained GCA Savvian Advisors as its financial adviser in connection with the potential sale.
With the decision to divest the Rovi Entertainment Store, the company will reclassify the operating results of the division as discontinued operations, beginning with its fourth fiscal quarter and full fiscal year 2012 results.
Rovi also Thursday revised estimates for full-year 2012 results. If the Rovi Entertainment Store business had been reclassified as discontinued operations when Rovi provided its 2012 estimates during its third quarter earnings call on Nov. 1, 2012, such estimates would have been fiscal year 2012 revenue of between $645 million and $655 million, and adjusted pro-forma income of between $2.00 and $2.10 per common share. Rovi now estimates that fiscal year 2012 revenue will be between $645 million and $650 million, with adjusted pro-forma income of between $2.05 and $2.10 per share.
In November, Rovi had said it anticipated fiscal year 2012 revenue of between $660 million and $670 million, and adjusted pro-forma income of between $1.80 and $1.90 per share.
Rovi is hosting an analyst and investor meeting on Jan. 9 in Las Vegas during the International CES, as previously scheduled.