Rovi Buys TiVo for $1.1 Billion

The new TiVo — the winning brand name for the merged companies — will be led by Rovi CEO Tom Carson

Entertainment technology company Rovi has purchased original DVR service TiVo for $1.1 billion, or $10.70 per share. Talks of such an acquisition heated up last month, and now it’s official — pending customary regulatory approval, of course.

That $10.70 per-share price represents a premium of approximately 40 percent over TiVo’s closing stock price of $7.66 on March 23 — the last trading day prior to media speculation about a possible transaction. It breaks down into $2.75 in cash and $7.95 in the new company’s common stock. Rovi stockholders will have an easy 1-for-1 swap for their own new stock.

The merged firms will be led by Rovi CEO Tom Carson, though it will adopt the TiVo brand as the new company name.

The Board of Directors for the combined company will include participation from TiVo’s current board. Both boards have approved the transaction — now it’s the government’s turn.

“Rovi’s acquisition of TiVo, with its innovative products, talented team, and substantial intellectual property portfolio, strengthens Rovi’s position as a global leader in media discovery, metadata, analytics, and IP licensing,” said Carson. “It’s an exciting time as the media and entertainment landscape undergoes a significant evolution.”

“The combined capabilities of TiVo and Rovi place us in a tremendous position to extend services across platforms and to a customer base that includes traditional, over-the-top and emerging players across the globe,” he continued. “By working together, Rovi and TiVo will revolutionize how consumers experience media and entertainment and at the same time build value for our stockholders.”

“We’re proud of TiVo’s strong innovation history and of the ongoing efforts of our team to provide best-in-class products for our loyal consumer and service provider customers,” added TiVo’s Interim CEO and CFO Naveen Chopra. “This transaction is the culmination of those efforts and the logical next step for TiVo.”

“In joining forces with Rovi, our customers, employees and stockholders will benefit from being part of a more diversified industry leader with significantly greater market opportunities,” Chopra concluded. “Our combination creates a more influential global player with a commitment to product innovation, which will be incredibly well positioned to redefine television.”

Evercore is serving as financial advisor to Rovi and Cooley LLP is serving as legal counsel. LionTree Advisors is serving as financial advisor to TiVo and Skadden, Arps, Slate, Meagher & Flom LLP is serving as legal counsel.

TiVo houses TiVo Research, a measurement firm that seeks to supplement industry currency for consumer behavior, including multi-platform viewership habits. The wing is partnered with Reality Mine this summer to analyze NBC’s Olympics.

TheWrap recently spoke with TiVo Research SVP Tara Maitra for a story on the state of TV ratings. When asked if the group will probably be bought out elsewhere, she replied, “Do I think that companies with money and resources out there will probably be interested to see what TiVo Research is doing? Sure.”

Below is the synergistic breakdown and explanation for the acquisition, as well as some forward-looking statements. All of the following is in the two companies’ own words.

Natural Synergy, Strong Business

This transaction brings together the technology and products required to achieve the company’s strategic goals and deliver substantial stockholder value.

  • TiVo’s leadership in user experience and content discovery brings together traditional television, OTT and on-demand content into one experience across devices
  • Rovi’s strength in guides, personalization, advertising, analytics and cloud services
  • On a pro forma basis, for the twelve months ended December 31, 2016, the combined company is estimated to have more than $800 million in revenue after purchase accounting adjustments
  • The combined company is expected to realize at least $100 million in annual cost synergies, with 65 percent of these synergies recognized in the first 12 months
  • The expected synergies are in addition to TiVo’s targeted current year $32 million Adjusted EBITDA increase from restructuring and margin improvements
  • The transaction is expected to be accretive to Rovi’s Non-GAAP EPS within the first 12 months post-close

Shared Customers, Global Reach

Rovi and TiVo serve many of the largest pay-TV operators both in the U.S. and around the world.

  • Combined benefits include enhanced global reach, serving nearly 500 service providers across countries, adding more than 10 million TiVo-served households to Rovi’s current base of approximately 18 million households using Rovi guides worldwide
  • Solutions will be integrated to deliver enhanced customer value and to strengthen relationships with top partners

Unique Company, Further Innovation

  • The transaction will create a company with a large presence in the consumer, consumer electronic, service provider and web-scale marketplaces
  • TiVo has played an iconic role in ushering in over a decade of rapid change in how consumers find, select, and watch television. These consumer innovations have also been successfully deployed for the benefit of service providers around the world
  • Rovi and TiVo have invested over $1.5 billion in R&D over the past 10 years. Few companies have had a greater impact on the evolution of TV and video.
  • This powerful combination of consumer innovation and service provider distribution will continue to be a unique asset of the combined company and will be further enhanced by Rovi’s prowess in areas like metadata, conversational search, and data analytics

Strong Intellectual Property Portfolios and Licensing Business

Together, Rovi and TiVo have worldwide portfolios of over 6,000 issued patents and pending applications worldwide.

  • Both Rovi and TiVo have been successful in monetizing their innovations and intellectual property, with more than $3 billion in combined IP licensing revenues and past damage awards
  • TiVo’s IP assets, combined with Rovi’s recent OTT partnership with Intellectual Ventures, further strengthens the company’s collective position as a leading provider of intellectual property in media and entertainment discovery

The Most Powerful Analytics in the Industry

The combined company will offer the industry’s most powerful analytics platform dedicated to media and entertainment, helping service providers and media companies strengthen consumers’ connections to the content they love.

  • Industry leading monetization products for services providers, advertisers and media companies, with access to data from multiple platforms including television, mobile and cloud services
  • TiVo’s unique cross-device viewership data merged with Rovi’s analytics tools will enable better targeting of media spend, improved advertising inventory yield and the creation of targeted advertising capabilities for service providers, advertisers and media companies
  • TiVo’s cross-device viewership data will enhance Rovi’s Operator Insights and Subscriber Analytics tools to give service providers more visibility and more precise methods to improve customer retention and manage churn