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TiVo ( TIVO ) stock surged on reports the DVR pioneer is in talks to be acquired by Rovi ( ROVI ), a provider of interactive programming guides to pay-TV companies and smart-TV manufacturers. Shares in TiVo surged 21% in the stock market today by midafternoon. Rovi stock fell 4%. Both TiVo and Rovi hold intellectual property for features built into pay-TV set-top boxes and garner licensing revenue. Rovi and TiVo face big changes among their customers as the pay-TV industry faces growing competition from Internet video providers, such as Netflix ( NFLX ), Alphabet -Google’s ( GOOGL ) YouTube as well as new TV hardware from Apple ( AAPL ) and Roku. Federal regulators aim to open up the set-top box TV market . TiVo shareholders would reportedly get cash and stock in the deal and own about 30% of the newly formed company. TiVo has expanded beyond hardware sales and patent licensing to online subscription services. TiVo’s customers include small and midsize pay-TV companies. Analysts have said TiVo aims to provide more cable firms with next-generation features, including its cloud platform and mobile apps, analysts say. Apple and Google have been among companies rumored to be interested in acquiring TiVo in the past. Rovi gets an IBD Composite Rating of 86 out of a possible 99, though today’s drop puts it below its key 50-day moving average. TiVo holds just a 26 Composite Rating. “Together, the combined TiVo and Rovi entity would have more than 6,000 issued or pending patents,” said Mike McCormack, a Jefferies analyst, in a research report. “TiVo alone has generated around $1.6 billion of settlements to date from patent enforcement lawsuits vs. Dish Network ( DISH ), AT&T ( T ), Verizon ( VZ ), and Cisco-Motorola-Time Warner. There are 380 issued patents in TiVo’s portfolio, plus 340 pending patents, many of which expire beyond 2018.” Scalper1 News
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