March 5, 2018
Seeking to streamline operating costs and reduce debt, Technicolor has sold its patent licensing division to InterDigital, a U.S.-based wireless R&D company, in a deal that value the unit at $475 million.
Paris-based Technicolor said InterDigital paid $150 million up front and will pay it 42.5% of future licensing revenue generated in consumer electronics, including deals with Sony Electronics.
Technicolor will maintain its Research & Innovation organization for its operating businesses, while engaging in funded research with InterDigital.
InterDigital will pay Technicolor $5 million annually, while investing an additional $5 million annually in internal R&D projects that are aligned with the priorities of the research cooperation.
“This agreement will allow us to fully focus on our core operating businesses and includes a collaborative research program built up on the strength of our research and innovation teams,” CEO Feederic Rose said in a statement.
Notably left off the auction block: disc replication.
Since acquiring Cinram Corp. in late 2015 and securing an outsourcing agreement with Sony DADC in North America and Australia set to begin in the second quarter, Technicolor has become the world’s largest replicator of DVD and Blu-ray Disc units.
A distinction some observers might liken to dominating newspaper publishing.
Disc replication remains part of Technicolor’s Entertainment Services division, which recorded flat fiscal 2017 pre-tax earnings at €230 million ($283 million), with revenue gains seen in the second half production services of last year due to better resource allocation.
The company said disc replication services would continue to maximize cash generation while continuing to develop further “opportunities.”
Indeed, Technicolor said it shipped a record 1.6 billion discs in 2017.
“People want to own their favorite movies, the classics, and the blockbusters,” Rose told Forbes.com. That’s what they put under the tree. We were the only ones who saw the growth left in this business.”