TiVo Negotiating With Rovi Over Merger

Digital Video Recorder Business TiVo, which made the DVR popular and revolutionized fast forward advertising and time shifting, is in what insiders described as advanced negotiations to be acquired by Rovi.

The deal would bring together Rovi, which is one of the biggest patents owners for devices for digital entertainment, and TiVo.

TiVo shareholders would receive a mix of cash as well as stock though an exact prices had not been agreed to.

Following the deal, TiVo shareholders would likely own approximately 30% of the new combined company. TiVo has been given a $750 million market value while Rovi has a market value of $1.7 billion.

The transaction would put an end to TiVo’s independence. The company has been a takeover target perennially with suitors rumored to be Apple, Microsoft, and Google amongst others.

Rovi, a company that is lesser known, might win TiVo due to Glenn Welling an activist investor of Engaged Capital that has won two Rovi seats on its board of directors.

Since that time, he has pushed aggressively to revaluate the strategy of Rovi and has pressed to seek an acquisition of TiVo.

A TiVo spokesperson declined to comments when requested while Rovi was not reached.

People briefed about the negotiations warned the deal was in a very sensitive stage and was still possible but could still end with no agreement.

Rovi was established after Gemstar was acquired by Macrovision. Gemstar made program guides that were interactive that helped consumers navigate shows on the television, and renamed the business in 2009.

The guides, which are used by close to 18 million worldwide television subscribers, made up just less than 50% of last year’s $526 million revenue for Rovi.

The remainder of its revenues was from the licensing of intellectual property. Rovi has counted TiVo traditionally as one of its top competitors.

Together, the companies have over 6,000 pending or issued patents, which are a critical defense for them versus larger media and tech giants.

Shares of Rovi have soared recently after the business renewed a number of large deals for licensing, but TiVo had move downwards trading as less than half its price as in August, due largely from investor concerns over competition.

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