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.”
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.”