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Arris's Exposure to TiVo Lawsuit Capped at $50M

Jeff Baumgartner
LR Cable News Analysis
Jeff Baumgartner
12/20/2012
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Arris Group Inc.'s financial exposure to the pending patent lawsuit between Motorola Home and TiVo Inc. is capped at $50 million, according to a Securities and Exchange Commission (SEC) filing Thursday that revealed more details about Arris's deal to buy the set-top maker from Google for $2.35 billion.

Arris and Google are each responsible for half of the first $50 million damages caused by any past infringement, and half of the first $50 million of future royalty payments as of the deal's closing, which is expected to occur by next April.

Importantly, Google has also indemnified Arris against an injunction. Of course, all of this factors into play only if Motorola actually loses the case.

Arris and Google disclosed the provisions when they announced the deal Wednesday night but wouldn't give details. Arris CEO Bob Stanzione would only say that Arris's exposure to the lawsuit would be immaterial and that he viewed an injunction as a "very remote possibility." (See Google Protects Arris From Big, Scary TiVo.)

The SEC 8-K disclosure should be a relief to the analysts who were concerned that Arris would be facing a much larger financial risk, as TiVo believes it's owed "billions of dollars" in damages from Motorola.

Arris, though, faces a steeper financial penalty should the Motorola Home deal falls apart. The break-up fee faced by Arris is $117.5 million, according to the filing. That's a sizable hit, considering Arris ended the third quarter with $571.2 million in cash.

— Jeff Baumgartner, Site Editor, Light Reading Cable



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