TiVo Splitting into Two Companies

Time-shifting video pioneer TiVo is separating its product and IP licensing businesses into two separate companies.

TiVo’s said its board concluded the separating would be the best strategy to maximize shareholder value. The company intends to spin out its DVR-based hardware business to shareholders. Throughout the separation process, the board would seek “strategic” transactions for each business that could create additional stockholder value.

“Operating independently, these two businesses will have increased flexibility to pursue new and growing market opportunities,” Raghu Rau, Interim CEO, said in a statement.  We believe this separation is the best way to maximize shareholder value, while also enhancing the possibility of value-creating strategic transactions.”

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TiVo expect to complete this transaction in the first half of 2020 through a spinoff of the product business to shareholders.

The product business offers software technologies video service providers or retail markets. At the end of 2018, there were an estimated 23 million households worldwide utilizing our TiVo software. The product segment generated $401 million in revenue, with a large component of recurring revenue.

TiVo believes the separation would “open” its product business up to greater receptivity from service providers, content providers and device manufacturers, as well as potential customers in new markets.

The unit is planning several new product and business model launches later this year, including creating a new content network with increased monetizable opportunities through advertising.

TiVo’s branded IP portfolios (including Rovi) encompass about 5,500 patents and pending applications worldwide. Licensees include traditional and new media video providers across pay-TV, over-the-top video, mobile, CE and social media markets. Licensing revenue reached $295 million in 2018, with a high percentage of this recurring revenue.

“As video consumption continues to shift beyond traditional pay-TV into Internet, social media and mobile domains, we believe it is important that the licensing business can diversify … into new consumer applications and functionalities,” Rau said. The separation will enable the IP business to strategically reinvest in its own business, not only to solidify its strong, existing foundation, but also to appropriately pursue new long-term growth opportunities.”

TiVo Leaving Legacy Set-Top Box Business

TiVo, which helped create the digital video recording business, May 10 revealed it is transferring manufacturing, sales and distribution of legacy set-top boxes to a third party.

The unnamed partner will be responsible for all TiVo product sales outside the company’s website, including Amazon and Best Buy, CEO Enrique Rodriguez said on a fiscal call.

“This quarter saw the last MSO hardware revenue as we completed fulfillment of orders made last year,” Rodriguez said. “Once we complete this transition, we still will have direct consumer hardware sales through TiVo.com which we will be fulfilling through this box manufacturer.”

The CEO said that future hardware sales would be facilitated through the partner, with TiVo acting as a distribution channel. The change should have little impact on consumers.

“Basically, the consumer will continue seeing a TiVo-branded device … with TiVo software that they have known over the years,” Rodriguez said.

He said Amazon and Best Buy are better suited to sell hardware than TiVo, which was acquired by Rovi Corp. in 2016, with Rovi assuming the TiVo corporate name.

“We’re very confident in [the partner’s] ability to succeed there,” Rodriguez said.

Indeed, TiVo generated the bulk of first-quarter (ended March 31) revenue ($189.8 million) from licensing, services and software ($186.1 million), with hardware generating $3.6 million. The tallies trailed year-over-year total revenue ($205.7 million), licensing, services and software ($190.5 million) and hardware ($15.2 million).

TiVo is also exiting so-called non-core revenue channels, including Legacy TiVo Time Warp IP deals, hardware and analog products. Indeed, non-core revenue declined $25.7 million in the quarter compared to the previous-year period.

Finally, TiVo cut its fiscal loss in half to $17.7 million from $34.6 million last year.

TiVo Inks License Deal with Starz

Home entertainment technology pioneer TiVo April 3 said it signed a long-term intellectual property license agreement with Starz.

Lionsgate-owned Starz is acquiring a license to the TiVo patent portfolios and over-the-top video assets of the “intellectual ventures” patent portfolio under the TiVo/IV licensing partnership.

“This agreement emphasizes the importance of TiVo’s patent portfolios, especially for companies who are working to keep up with rapid developments and changes in the OTT video space,” Arvin Patel, EVP and chief intellectual property officer, Rovi Corp., a TiVo company, said in a statement.

TiVo, which created the digital video recorder market in 1999, has spent decades investing in R&D to enhance digital distribution technologies for the media and entertainment industry.

In 2016, Rovi acquired TiVo for $1.1 billion, incorporating the TiVo name as its new corporate identity. Between the two companies, they reportedly hold more than 6,000 patents used in practically every aspect of consumers’ day-to-day interaction with their entertainment.

“By leveraging [our] innovations, TV networks and other OTT [distributors] can quickly strengthen or upgrade the entertainment experiences they provide and in turn, spend more time and energy focused on other business priorities,” Patel said.

Indeed, patent litigation has proved to be a lucrative side business for TiVo. The company has been awarded by courts more than $1 billion in patent settlements through 2012.

Earlier this year, TiVo filed a lawsuit against Comcast, alleging the pay-TV operator’s X1 set-top infringes technology invented and patented by Rovi, including pausing and resuming shows on different devices, restarting programs in progress, advanced DVR recording features, and advanced search and voice functionality.

Dish Activates Netflix on Hopper Duo Set-Top

As expected, Dish Network has activated the Netflix app in its Hopper Duo set-top box enabling subscribers direct access to the subscription streaming video behemoth.

Similar to other third-party installs, direct access to the streaming video pioneer requires a separate subscription.

In January, Dish rolled out the Hopper Duo, a dual-tuner HD set-top for one- and two-TV households. Hopper Duo packages the most essential features of Dish’s Hopper 3 for consumers with smaller-scale entertainment setups.

Features include a 500 GB hard drive for up to 125 hours of HD DVR recording; compatibility with Amazon Alexa voice control; universal search; Bluetooth audio support via adapter; picture-in-picture viewing; remote finder; and apps like game finder, Pandora, Dish on-demand – and now Netflix.

The average number of pay-TV set-top devices per household in the United States is 1.7, according to the Leichtman Research Group.

Leichtman found that 69% of domestic TV households have at least one TV connected to the Internet via a smart TV set, a stand-alone device (like Roku, Chromecast, Amazon Fire TV stick, set-top box, or Apple TV), a video game system, and/or a Blu-ray Disc player – up from 50% in 2014, and 24% in 2010.

TiVo Mulls Going Private, Among Other Strategic Alternatives

Digital video recording pioneer TiVo is pursuing range of strategic alternatives, including returning to private status, in an effort to enhance shareholder value, new CEO Enrique Rodriguez said on the Q4 (ended Dec. 31, 2017) fiscal call.

Despite myriad technology license agreements in place industrywide, including with four of the five top online TV services (Sling TV, DirecTV Now, PlayStation Vue and YouTube TV), in addition to Discovery, HBO, Netflix, CBS Interactive, A&E Network and Sony Pictures Entertainment, TiVo saw quarterly revenue fall 15% to $214.2 million compared with revenue of $252.3 million during the previous-year period. Net income topped $18.4 million compared to $9.8 million last year.

Meanwhile, TiVo shares have lost nearly 30% of their value over the past fiscal year.

As a result, Rodriguez is considering a series of moves aimed at upping the shareholder price. Tech advancements include the “TiVo Experience 4,” which enables users to more easily to search, navigate, buy or rent movies, TV shows, recorded content and over-the-top video via a voice-activated remote.

TiVo is also suing Comcast, claiming the cable giant’s X1 set-top violates eight of its patents.

“We need to determine the optimal path to maximize our value proposition, so we can best deliver value to our shareholders,” Rodriguez said. “We have enlisted LionTree Advisors, to assist us in this process.”

News of a possible return to private ownership sent TiVo shares up more than 10% in afternoon trading.

Dish Bows Hopper Duo Smart DVR

Dish Network Jan. 22 released Hopper Duo, a dual-tuner HD set-top DVR for one- and two-TV households.

The average number of pay-TV set-top boxes per household in the United States is 1.7, according to a recent study by Leichtman Research Group.

Hopper Duo supports a second HDTV when paired with a Joey (Joey, 4K Joey or Wireless Joey). With two tuners, Hopper Duo customers can watch or record two live programs simultaneously. If a customer is recording two live shows, they can still watch previously recorded titles from their DVR or anything from the OnDemand catalog.

The Wi-Fi-capable Hopper Duo includes a modern user interface with HD graphics and easy content discovery; a 500 GB hard drive for up to 125 hours of HD DVR recording; compatibility with Amazon Alexa voice control; universal search; Bluetooth audio support via adapter; Picture-in-Picture viewing; Remote Finder; and apps like Game Finder, Pandora and DISH On-Demand, with Netflix coming soon.

The device ships with DISH’s new voice remote.

“The average U.S.home has about two TVs connected to a pay-TV service,” Niraj Desai, VP of product management, said in a statement. “Hopper Duo is a feature-rich, high-value product for households that want DVR capacity for [up to] two screens.”

Beginning today, qualified new and existing customers can receive a Hopper Duo at no upfront cost. The Hopper Duo system requires a whole-home DVR fee of $10 per month, with an additional $7 per month required for an added Joey.