In a deal that drives more consolidation and scale into video navigation and discovery, as well as viewing measurement and analytics, Rovi and TiVo are merging under a deal valued at $1.1 billion.
Rovi will pay $2.75 per share in cash, or $277 million, with the remaining $7.95 per share to be paid in shares in common stock of a new holding company, according to the deal announced last Friday (April 29). The companies expect to get $100 million in annual cost synergies through the combo.
The merged company, which will adopt the TiVo brand, will be led by current Rovi CEO Tom Carson. The deal is expected to close in the third quarter.
The proposed merger will fuse two companies with extensive patent portfolios and interactive guide products, data analytics and video discovery tools, and, in TiVo, a digital video recorder pioneer that builds devices for sale at retail and in partnership with a growing mix of pay TV partners including Virgin Media, Suddenlink Communications, Mediacom Communications, and RCN.
TiVo has more than 7 million subscribers worldwide, with most coming by way of MSO deals. Combined, TiVo and Rovi will serve nearly 500 service providers worldwide and have more than 6,000 issued and pending patents. The two companies are expected to combine overlapping products, but Rovi stressed that retail, a key part of TiVo’s business, will stay in the game plan.
“We view [retail] as a very important channel to be able to maintain focus on,” John Burke, executive vice president and chief operating officer of Rovi, said. “We think there’s great opportunity there, so we fully expect to continue to leverage that.”
TiVo, meanwhile, recently underwent a restructuring that calls for a greater focus on MVPD partnerships and more efficient spending on the retail end.
Naveen Chopra, TiVo’s chief financial officer and interim CEO, said Rovi is the “right” partner for TiVo, in part because it “understands the role and the value, strategically and otherwise, of our consumer business … It was important for us to find a partner that could take that forward and do it in a way where we’re combining it with other businesses that bring a lot of scale and a lot of synergies.”
But the combined company will also have a few things to mop up, particularly at Comcast. TiVo is working with Comcast on a non-CableCard solution for retail products; Rovi recently filed a patent suit against Comcast and some of its box suppliers after the MSO’s license expired and wasn’t renewed.