The deal, which has been rumored since last month, will combine the two companies into a new one that operates under the TiVo name. It will be led by Tom Carson, currently Rovi CEO.
The new company, which will serve close to 500 service providers internationally, is expected to realize at least $100 million in annual cost synergies, said Rovi, with 65 percent of these synergies recognized in the first 12 months. TiVo said last week it had 7 million subscribers. Rovi is a content-discovery platform and Cloud services provider for TV and over-the-top device manufacturers. More than 18 million consumers use its platforms, according to the company.
An industry pioneer with the DVR, TiVo faced difficulty in the retail market as cable operators built similar recording technology into their set-top boxes. The company showed renewed focus on retail last fall when it launched the Bolt, a 4K-compatible DVR that enables consumers to skip entire commercial breaks. It also targets cord-cutters with its Roamio DVRs.
The deal is beneficial for both companies, Vincent Moy, entertainment industry analysis director at The NPD Group, told TWICE, as TiVo is challenged by differentiating itself from the cable providers’ offerings, while Rovi suffers from a lack of name recognition among consumers. Using the TiVo name will allow Rovi to tap into the brand equity of the name synonymous with the first DVR, he said, “rather than spending time and money to establish familiarity with the Rovi name.”
“Ultimately, both companies’ offerings and needs complement each other,” said Moy. “Rovi wants to generate more revenue, and increasing its consumer-facing presence via TiVo is means to that end. In contrast, TiVo needs to stand out in a crowded field of search-and-record content competitors and leveraging Rovi’s broad metadata and analytics heritage could deliver a wealth of possibilities to differentiate itself.”
In the statement announcing the deal, Rovi’s Carson said: “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. 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. 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. 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. Our combination creates a more influential global player with a commitment to product innovation, which will be incredibly well positioned to redefine television,” said Naveen Chopra, TiVo interim CEO and chief financial officer.
The deal is subject to approval by both company boards and customary closing conditions.