In a decision that took more than a year to make, TiVo ultimately opted to split its products business and its intellectual property and licensing businesses into two completely separate entities.

Last March, TiVo announced it was "exploring all alternatives" -- including possibly selling part or all of the company or taking TiVo private -- but it became increasingly clear in the following months that dividing the company into two would be the path taken.

TiVo's products unit includes its platform, software and services for retail sale as well as boxes and software offered in partnership with cable operators. TiVo said its product segment generated $401 million in revenue for full-year 2018, and that about 23 million homes worldwide used its platform solutions by that time.

"That product business can stand on its own without the IP business by its side," said Matt Milne, TiVo's chief revenue officer. "It has scale and it's always looking for more scale."

TiVo's IP licensing business contains about 5,500 issued patents and others still pending worldwide, and TiVo believes the separation will enable it to pursue a broader, horizontal licensing strategy that can spur growth. But the company didn't outline which specific areas it wants to reach into. The IP licensing business pulled down $295 million in revenues for full-year 2018. TiVo has nine of the top ten US pay-TV providers on board. The outlier is Comcast, which continues to battle with TiVo in the courts and at the International Trade Commission.

The plan is to split these two businesses into two separate, publicly traded companies with different, full management teams and boards, expected to be identified in the months to come. TiVo said the process is expected to be completed in the first half of 2020 and done through a tax-free spin-off of the product business to shareholders. TiVo said it is pursuing a ruling from the US Internal Revenue Service that the spin-off will indeed be tax-free.

Additional 'strategic transactions' could follow the split
With each company operating independently, each will also have a better opportunity to pursue "value-creating strategic transactions," TiVo Interim President and CEO Raghu Rau said in a statement.

"By separating from our IP Licensing business, we believe that our Product business can pursue a customer-first strategy without the encumbrances or complexity of being tied to an IP Licensing business," Rau added. "We expect that operating independently will open our Product business up to greater receptivity from service providers, content providers and device manufacturers, as well as potential customers in new markets."

TiVo isn't defining how such potential transactions might take shape, and if that means one of the businesses or both might be acquired by another company or that they might pursue acquisitions of their own.

"Any transaction that helps us create scale and profitability" will be considered, Milne said. "It is believed that each of these companies can align themselves with other industry players in a way that can create scale."

The structures of those transactions, Milne added, "can take on a number of forms, but we're not in a position today to talk about them more definitively than that."

Also to be decided is how each independent company will be branded, though Milne stressed that the two companies will indeed carry separate identities. TiVo and Rovi competed a $1.1 billion merger in the fall of 2016. Some industry watchers are already speculating that the products business will retain the TiVo name, and the IP and licensing company could revert to Rovi.

TiVo also announced Q1 results today -- total revenues of $158.23 million, down 17% year-over-year, and an operating loss of $8.02 million, narrowed from a year-ago operating loss of $9.04 million.

Total product revenues were $91.30 million in Q1, down 22%. TiVo posted Q1 total licensing revenues of $66.93 million, down 8%. Of that total, $42.11 million came way of US pay-TV providers.

For fiscal 2019, TiVo expects revenues of $640 million to $654 million, and a GAAP loss before taxes of $75 million to $87 million.

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— Jeff Baumgartner, Senior Editor, Light Reading