ReplayTV Goes on Auction Block - Multichannel

ReplayTV Goes on Auction Block

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It looks like ReplayTV will be available to the highest bidder after all. After filing for Chapter 11 bankruptcy protection late last month, parent company SonicBlue Inc. was unable to pull together a deal to sell the digital video recorder company, along with its Rio MP3 business, to Japanese electronics provider D&M Holdings.

The bankruptcy court deadline to consummate the $40 million deal passed with no final agreement. The two units will now be offered separately at an auction April 15.

"While we worked very hard with the D&M team over the last few weeks, we were just not able to finalize all of the needed terms before the court-set deadline," SonicBlue CEO Greg Ballard said in a statement. "Our relationship with D&M is still strong, and we anticipate that they will participate in the court-run auction process in April."

SonicBlue also wasn't able to wrap up a deal to sell its GoVideo digital video recording unit to Opta Systems for $12.5 million. That unit also is headed for auction on Friday.

Pricey units

While ReplayTV's DVR technology was among the earliest, SonicBlue found that its business didn't play as well as it hoped.

The company, best known for its Rio line of MP3 products, acquired start-up ReplayTV Inc. in 2001, but found a somewhat sluggish uptake for the products. Critics pointed to a relatively high box price for the Replay 4000 DVR series, ranging from $400 to $1,300.

The search for new revenue prompted SonicBlue to add a service fee to its ReplayTV product line in September, requiring customers to pay either $9.95 per month or a one-time $250 service fee to use their ReplayTV 4000 units.

Later that month, the company cut staff by 25 percent, including its chief marketing officer and chief technology officer. By that time, SonicBlue stock had fallen below $1, prompting NASDAQ officials to begin proceedings to drop the company from the exchange.

Battled studios

Its DVR technology, meanwhile, also faced challenges. SonicBlue fought a protracted legal battle in 2002, when several television networks and film studio outlets sued over the ReplayTV 4000 unit's ad-skipping capabilities and content-copying features. The studios dropped that suit late last year.

In the fourth-quarter SonicBlue posted a $33.4 million net loss.

In January, SonicBlue hired financial firm Houlihan Lokey Howard & Zukin to explore its options, including buyout or bankruptcy. The company eventually decided on the latter, filing for Chapter 11 protection in February.

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