Could Comcast Nix a SeaChange Sale?
As part of their 2006 agreement, Comcast gets a "right of first offer" to buy SeaChange's VoD business, should SeaChange decide to sell that business or its assets. And, if SeaChange gets bought outright, the new owner (Arris, in this possible case) would be required to give Comcast a perpetual license to the VoD software.
Back then, this kind of contingency language was not considered a path of future action; it was protection Comcast wanted in there just in case someone like Verizon Communications Inc. (NYSE: VZ), one of SeaChange's other big customers, tried to buy SeaChange and upset the balance of technology power.
I've asked SeaChange and Comcast if that clause is still active … the deal is four years old, after all.
I seriously doubt that Comcast would object to Arris buying SeaChange, since it does lots of business with Arris already, but the contingency language is in there, so I'm drawing some attention to it.
Buying vendors to gain control of the fate of its products isn't exactly foreign to Comcast, either. It now owns the bulk of what used to be called Liberate Technologies, a set-top software and ITV apps company, and has folded it into the wholly owned TVWorks LLC unit. SeaChange, by the way, bought Liberate's international assets in 2005. (See SeaChange Buys Liberate European Unit and Cox Severs Ties to TVWorks.)
Some other companies Comcast bought to shore up its in-house portfolio of strategic technology assets: thePlatform Inc. and Plaxo. [Ed note: Can you think of any others?]
Separately, Yoav Schreiber of Current Analysis notes on Twitter that Arris could also be coveting SeaChange's penetration of the telco and wireless markets.
An important point, because Arris's historic Achilles heel has been its reliance on cable business -- particularly from Comcast and Time Warner Cable Inc. (NYSE: TWC). If either of those two catches a cold, Arris tends to get pneumonia. It's happened several times, and its stock has taken big hits as a result.
SeaChange would give Arris a bit more customer diversity thanks to its deals with Verizon and Virgin Media Inc. (Nasdaq: VMED), to name just two of the bigger ones.
— Jeff Baumgartner, Site Editor, Light Reading Cable