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Google Protects Arris From Big, Scary TiVo

Jeff Baumgartner
LR Cable News Analysis
Jeff Baumgartner

Arris Group Inc. faces a massive integration challenge with its $2.35 billion play for Motorola Mobility LLC's Home business, but execs spent most of Q&A portion of Wednesday night's conference call deflecting questions about the financial risk Arris faces from the pending patent lawsuit between TiVo Inc. and Motorola.

Arris Chairman and CEO Bob Stanzione got asked about that six ways to Sunday, and he stressed each time that Google has essentially indemnified Arris, should Motorola come out on the losing end.

The deal, he said, includes provisions that cap the potential liability Arris would face from any IP-infringement litigation already in progress, including the TiVo case.

Stanzione wouldn't specify the cap, saying only that it's "at a level that we expect will not be material." So, analysts needled and prodded him about it for about 20 minutes.

One analyst pressed for a ballpark figure: more than $1 billion? "No," Stanzione said. "The cap is nowhere near $1 billion. Our potential liability is a very small number."

Has Arris thought about the possibility of an injunction? "Yes, we have thought about that, and we do think it's a very remote possibility."

They have some legitimate concerns. TiVo has a good track record going, having already wiped the floor with Verizon Communications Inc., AT&T Inc. and Dish Network Corp. And now TiVo thinks it's owed "billions of dollars" in damages from Motorola.

Stanzione appeared to bristle a bit at the apparent perception that Motorola's going to get creamed by TiVo. "We believe we can negotiate our way through that if, again, we indeed lose the suit. That's not a given."

But who's Arris's decision-maker in the case? "We have no decision to make," Stanzione said. "Google has taken that risk off the table for Arris."

The TiVo Question dominated Wednesday's call, but we'll be following up soon with stories that cover other angles of a deal that's expected to have rippling effects on the cable industry.

— Jeff Baumgartner, Site Editor, Light Reading Cable

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Pete Baldwin
Pete Baldwin,
User Rank: Light Beer
1/5/2013 | 2:03:41 AM
re: Google Protects Arris From Big, Scary TiVo

If they spent so much time on this question, then the other concerns must be smaller, right? (Maybe.) (Sort of.) (OK, not necessarily.)

Pete Baldwin
Pete Baldwin,
User Rank: Light Beer
1/5/2013 | 2:03:40 AM
re: Google Protects Arris From Big, Scary TiVo

They're doing their jobs. We would do the same.

The bigger question, harder to ask, is the one about swallowing a company this size. Synergies don't happen until after that part's done. To be fair, I don't think there's a satisfactory answer Arris can give here right now -- they'll just have to go and do it.

User Rank: Light Sabre
1/5/2013 | 2:03:40 AM
re: Google Protects Arris From Big, Scary TiVo

Synergies usually are no more difficult to find than Bigfoot. And they are usually no more difficult to execute than teaching Bigfoot how to tap dance. Bright side times two!

User Rank: Light Beer
1/5/2013 | 2:03:37 AM
re: Google Protects Arris From Big, Scary TiVo

Google and Arris have a pretty good idea of their maximum liability. TiVo has now established some pretty clear parameters with Dish, AT&T, and Verizon settlements on reasonable and non-discriminatory licensing for the '389 patent. I think the ability to force an injunction still exists for TiVo if Moto/TWC won't agree to the parameters established in the other cases. The court, IMHO, would frown on this actually going to trial - hence the reason that Judge Gilstrap has mandated mediation in the case. 

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