TiVo Will Split Into Two Separate Companies to Maximize Value
DVR pioneer TiVo announced that it will split into two companies, one for its TV platform and the other for IP licensing.
The product business includes a suite of technology that is either sold under the TiVo name or integrated into customer platforms. The IP licensing business includes roughly 5,500 patents and pending applications from TiVo and Rovi (Rovi acquired TiVo for $1.1 billion in 2016 and took on the TiVo name). TiVo licenses to a variety of pay TV, OTT, mobile, and social media customers. The product side made $401 million in revenue last year, while IP licensing made $295 million.
Explaining the value of breaking apart, TiVo stresses that its TV platform needs to be viewed as a neutral player that connects viewers with content and monetizes their transactions. The company believes that freeing its viewing platform from IP licensing will allow it to get a better reception from service providers, content providers, and device makers. At the same time, it will allow the IP licensing business to pursue a long-term growth strategy that involves moving beyond video discovery and recording into new areas.
TiVo expects the separation to be complete in the first half of 2020. It hasn't announced the management teams for the two companies at this time, and notes that it will need to get final approval from its board or directors prior to separation.
“In the rapidly evolving market landscape we now operate in, we have determined that our product and IP licensing businesses will be better positioned as standalone separate entities,” said Raghu Rau, TiVo's interim president and CEO. “Operating independently, these two businesses will have increased flexibility to pursue new and growing market opportunities. We believe this separation is the best way to maximize shareholder value, while also enhancing the possibility of value-creating strategic transactions.”
The company announced set-top boxes and an ad-supported streaming service today, and both show it paying attention to the growing number of cord-cutters.
The newly combined company will be a digital entertainment giant, holding over 6,000 patents and ready to grow in new platforms.