Liberate, NTL Pump $10M Into Diva

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Redwood City, Calif.-Liberate Technologies and British media company NTL Inc. invested $10 million in video-on-demand vendor Diva Systems Corp. before the company filed a registration statement last week for a proposed initial public offering.

Middleware vendor Liberate made a $4 million equity investment, and NTL made a $6 million equity investment.

Separately, Diva said it signed a definitive agreement with Liberate in which Diva will integrate its technology with the Liberate "TV Platform" software. Diva said the companies will jointly market the combined offering.

The deal with NTL deepens a budding relationship under which the two companies are working to deploy VOD services over NTL's cable network.

Diva's development agreement with NTL, signed in September, was its first international contract. In addition to its British properties, NTL owns Irish MSO Cablelink Ltd., and it has agreed to buy Switzerland's largest cable operator.

Diva filed documents with the Securities and Exchange Commission May 9 for a $75 million IPO. Diva did not reveal how many shares it will offer to the public or at what price. The company reported a loss of about $49 million last year on revenue of $1.1 million.

According to SEC documents, Diva has generated about $1.5 million in revenue and lost a total of $292.3 million since its inception in 1995. The company said it expects to continue losing money for the next few years as it rolls out its VOD products and lands additional deals with MSOs.

But the VOD space is expected to be a hot one in the coming months, and Diva has first-mover advantage, landing deals with five MSOs, including MediaOne Group Inc., Chambers Communications Corp. and NTL.

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