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NeuLion Acquires DivX, Creates a Full Online Video Solution

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"It's bringing two leaders together and now we have a full managed solution," said Eric Grab, CTO for DivX. Just as International CES 2015 was beginning, news broke that NeuLion will acquire DivX by the end of March. Bringing the two companies together was actually more of a merger, Grab said, as both company's abilities complement each other perfectly.

NeuLion works with a number of sports rights-holders, creating full-service solutions to put their content online and monetize it. DivX is focused on DRM, consumer electronics, and codec and compression development. While it might seem an unlikely marriage, Grab says together they offer a comprehensive offering for customers, who can use the combined solution or just the pieces they need. NeuLion will offer DivX's 4K expertise to its sports clients, and DivX will benefit from having a platform to market its video services.

"There's tremendous areas we can grow for sports and all content," Grab says.

DivX has only been independent company for less than a year, after being sold by Rovi, and Grab says the executive team wasn't looking for an offer. But when investors suggested the company look for a complementary partner, DivX made a list of its strengths as well as what it lacked and found a perfect counterpoint in NeuLion. The two companies began a conversation and only a few months later announced the acquisition.

The CEO of DivX will be the CEO of the new combined company. DivX and NeuLion have offices across the country from each other, and will remain that way. The acquisition price is $62.5 million, comprised of $37.5 million in shares of NeuLion common stock and a $25 million two-year convertible note. The valuation speaks for DivX's engineering talent and intellectual property.

Acquisition talk isn't the only thing taking place at the DivX CES booth. The company is showing off its airline entertainment system, currently in progress. Grab is optimistic that it could transform inflight entertainment. The system lets airlines dispense with seat-back screens, and have passengers use their smartphones or tablets, instead. Passengers will tap into the plane's entertainment system via Wi-Fi, then stream free or paid entertainment on-demand. The system halts playback during PA announcements and lets passengers view unfinished shows and movies after they get home. DivX is working with an airline on adoption right now, and plans a customer announcement for sometime in Q1 2015.

But naturally, the acquisition is the big talk at the booth. DivX is confident it has the tools to make an impact in entertainment, sports, and 4K video.

'"We're in a really great place to accelerate OTT adoption in the industry," Grab said.

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Wed., Jan. 6, by Troy Dreier