A little over a month after Light Reading reported new rumblings about a potential TiVo acquisition, The New York Times has published a story declaring that Rovi is in "advanced negotiations" to acquire the DVR pioneer.
According to the NY Times, Rovi Corp. , which has a market value of $1.7 billion, is looking to buy a majority stake in TiVo Inc. (Nasdaq: TIVO), which has a market value of $750 million. As the negotiations stand now, the newspaper reports that TiVo investors would walk away from the transaction with about 30% ownership of the combined company. TiVo and Rovi both declined to comment on the merger story.
In February, Light Reading reported that multiple sources were predicting a possible TiVo acquisition in 2016. TiVo has walked a tightrope for years, but is now in the position of managing a declining retail business on one side, and a service provider business that is constantly under pressure on the other. (See Is 2016 the Year TiVo Gets Acquired?)
Meanwhile, Light Reading also heard from three independent sources last month that Rovi might be in play as well. However, because there was no evidence of how Rovi might approach an M&A deal, there was no story to report at the time.
A Rovi/TiVo merger makes sense from the perspective of combining Rovi's metadata assets and technology like its conversational user interface with TiVo's existing hardware and software platforms. However, an exact business model for the combined company is still unclear. Does the business continue to pursue Tier 2 and international platform sales to service providers? Does it go after the consumer electronics market more aggressively? Does it rely primarily on the metadata portfolio that is still a critical asset even for Tier 1 operators that have moved on to develop their own user interfaces?
Stay tuned as the story develops. And for further reading, see below.
— Mari Silbey, Senior Editor, Cable/Video, Light Reading