It's that time again. Time for rumors about TiVo selling out and selling off to one of the larger companies bandying about in the TV space.
Light Reading has heard from multiple sources that there are "rumblings" again about a potential TiVo acquisition. This is nothing new. Rumors of TiVo's demise and/or buyout have been making the rounds for at least a decade. But there may be good reason to pay attention this time, or at least to consider the arguments for a transaction.
TiVo Inc. (Nasdaq: TIVO) has done remarkable things to survive into 2016. It fought the early onslaught of cable-provided DVRs once operators finally realized their customers wanted digital recording capabilities. It leveraged the CableCARD movement to continue its retail success even when nobody else could make anything positive come out of the separable security module. And, most improbably, it eventually forged a business out of selling its platform to pay-TV providers, turning many of its former cable enemies into willing strategic partners.
However, TiVo is once again at a crossroads. Even as it searches for a CEO to replace long-time stalwart Tom Rogers, who stepped down from the position at the end of January (he's still non-executive Chairman of the Board), the company faces challenges that go far beyond finding new leadership. (See TiVo CEO Rogers Bows Out at Critical Time.)
The retail business is growing more difficult. Swamped by media streamers from Roku Inc. , Amazon.com Inc. (Nasdaq: AMZN), Apple Inc. (Nasdaq: AAPL) and Google (Nasdaq: GOOG), the market hasn't flexed to find much room for TiVo's more expensive set-tops. The relatively new Bolt product is an attempt to garner more mass market appeal, but even if it's successful, TiVo still has a lot of retail ground to make up. (See TiVo's Retail Fortunes Flag and TiVo's Future Looks Nothing Like Its Past.)
More importantly, TiVo's potential for continued success in the service provider market is difficult to gauge. Most of TiVo's recent growth has come from service providers in international markets. However, one key customer, Liberty Global Inc. (Nasdaq: LBTY), ended up signing with TiVo only because it acquired the relationship when it bought out Virgin Media. That deal has been renewed through 2020*, but it's a good bet that Liberty will eventually migrate Virgin customers over to its own Horizon TV technology.
By and large, the biggest pay-TV operators are taking a much more hands-on approach to developing their own multiscreen video platforms, which is a negative for TiVo. That still leaves a decent business opportunity among smaller operators, but it's not quite the plum prospect it might have been, particularly as the pay-TV market continues to consolidate.
So who would buy TiVo? That's tougher to ascertain. The two leading choices are both busy integrating earlier acquisitions. Technicolor (Euronext Paris: TCH; NYSE: TCH) is still absorbing Cisco Systems Inc. (Nasdaq: CSCO)'s set-top business, and Arris Group Inc. (Nasdaq: ARRS) just swallowed up Pace.
If TiVo really does have suitors this time around, however -- as one source claims -- it would make sense for the company to consider them seriously, while its business is still pretty strong and it still has Liberty Global on the books.
Editor's Note: An earlier version of this story stated that the deal with Virgin ran through 2018. It's been corrected to 2020.
— Mari Silbey, Senior Editor, Cable/Video, Light Reading