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Rovi To Acquire Sonic Solutions

12/23/2010 01:30:24 PM Eastern
Santa Clara, Calif. - Rovi, the developer of electronic program guide and metadata platforms, said Thursday it reached a definitive agreement to add Sonic Solutions to its growing portfolio of entertainment service company acquisitions.

Sonic Solutions owns the RoxioNow video distribution platform, and supports a number of software and cloud-based streaming video platforms with key retail partners.

The company also provides DVD and Blu-ray player software for PCs, among other things.

The RoxioNow video distribution platform is used with Boxee, CinemaNow, Blockbuster to rent and sell digital copies of movies over the Internet.

Sonic Solutions also owns DivX and MainConcept, a leading licensor of A/V codecs to the PC and CE industry.

The enterprise value of the deal, which is expected to be finalized in January 2011, is approximately $720 million. The acquisition is structured as an exchange offer for all of the outstanding shares of Sonic common stock, to be followed by a merger, the companies said.

In a statement on the acquisition, the companies said "Sonic will enable Rovi to broaden its solutions to content owners, device makers, retailers and operators."

The combined company will be able to power the next generation of digital entertainment offerings with content discovery, delivery, and enhanced interactivity capabilities that support advertising and drive consumer engagement, the statement said.

Integration between RoxioNow and TotalGuide has already occurred as part of the TotalGuide general availability release - RoxioNow's retail customers are supported through TotalGuide. In the future, Rovi expects to power RoxioNow's user experience with the same web services that power TotalGuide, Rovi said.

Rovi added that "it
believes this integration will result in accelerated uptake of premium content."

"For our Hollywood studio partners, eager to expand digital delivery, the larger footprint of our combined company enables them to market their content broadly," stated  Dave Habiger, Sonic Solutions president and CEO.

Fred Amoroso, Rovi president and CEO, added: "We believe Sonic has built an exciting portfolio that complements Rovi's TotalGuide as well as our broad portfolio of solutions. Together, we believe the two companies will be able to address the expanding digital entertainment market with unique capabilities that will bring enhanced value to consumers."

In explaining the move, Corey Ferengul, Rovi product management and marketing executive VP, told TWICE that Rovi made the move at this time because its investments in cloud services and other technologies were continuing to mature "and in the last six months of the year we began to believe that cloud services was really the way to go for the future and we should find other investments there."

The two companies had a long working relationship in the past, and after Sonic acquired DivX "they became more appealing to us as well because it broadened the touch points between the companies and customers."

"We are always looking to acquire the right companies, and this of course signals we are in a more aggressive posture," Ferengul added. "This is such a fast moving space that we have concluded that there is no way you can build everything from the ground up. Time to market is so critical."

Ferengul said that Rovi can now walk into a prospective CE manufacturer customer and say: "We can help power your technology, we can help power your search and recommendations and we can bring in a video delivery capability whether you want to create your own private label store or bring in these branded customers we have, like a Blockbuster on Demand or a Best Buy. We can then have a much broader conversation with the customer about what pieces they need to help build up their value proposition."

Ferengul said Rovi will offer a range of customizable solutions that each CE manufacturer can use to differentiate their offerings from their competitors.

"The more we have to offer them, the more flexibility we allow for them to create uniqueness," Ferengul said.

As for advancing Sonic Solutions' platforms, Ferengul said Rovi expects to build on the streaming HD options available through various service partners and it will continue to study the 3D market for possible new offerings, "but right now there is no rush to build a 3D catalog."

Ferengul said Rovi will be making decisions on the integration of the management teams in the near future, and no staffing decisions have been determined at this time.
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