Did Google Overpay for Widevine?

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In December, Google acquired Widevine, a startup that provides digital rights management software and video-delivery technologies, for an undisclosed amount (see Google Buys DRM Provider Widevine).

With Widevine’s DRM, Google will have a “critical building block in its ability to deliver premium content to devices using its Android, Google TV and Chrome technologies,” VideoNuze’s Will Richmond wrote at the time.

Now Fortune’s Dan Primack is reporting the search giant plunked down $150 million in cash for Widevine — a price tag, he added, well above the $30 million to $40 million valuation by the company’s “management,” sourcing an anonymous Widevine investor. What’s more, according to his source, there weren’t any other bidders for Widevine.

Google reps declined to comment.

I got on the phone with Liza Boyd, managing director of Constellation Growth Capital, who previously sat on Widevine’s board. She disputed a couple of things in the Fortune post.

First, Widevine never had an internal valuation of $30 million to $40 million, she said.

“We would never have sold the company for that price,” she said.

Also, according to Boyd, there were indeed multiple bidders. She wouldn’t say who those were, but I previously heard that Cisco had put in an offer to acquire Widevine before losing out to Google. Cisco’s recent acquisitions include Inlet Technologies and ExtendMedia (see Cisco To Buy Video-Streaming Startup Inlet For $95 Million and Cisco’s Deal for ExtendMedia Said to Be $65 Million).

Note that Cisco was a Widevine investor, along with Samsung, Liberty Global, EchoStar, Telus, Dai Nippon Printing Co., PaceSetter Capital Group, Phoenix Partners, Charter Ventures, VantagePoint Venture Partners, Western Technology Investments and Constellation (see Liberty Global, Samsung Invest In Widevine). Widevine had raised more than $65 million in funding since CEO Brian Baker founded it in 1999.

But back to the original question: Did Google overpay for the DRM company?

Boyd declined to comment on the sale price but said, “What Google got with Widevine was a treasure trove of intellectual property.”

Widevine’s intellectual property portfolio includes 60 U.S. and international patents comprising 2,000 claims. Recall that Widevine sued competitor Verimatrix alleging patent infringement; the two companies settled out of court last year (see Widevine, Verimatrix Settle Patent Dispute).

Widevine also brought with it a nice list of customers, including AT&T, NBC, Dish Network, Netflix, Best Buy, Panasonic, Sonic Solutions (which is being acquired by Rovi) and Boxee (see Netflix, Best Buy Climb On Widevine’s DRM and Dish ‘TV Everywhere’ Service To Use Widevine Technology).

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