WSJ: AT&T to Pay $215 Million to TiVo

[Mojo Jojo]

From WSJ:

[h=1]AT&T to Pay $215 Million to TiVo[/h]
[h=3]By IAN SHERR[/h] TiVo Inc. scored another major patent victory as AT&T Inc. agreed to pay the set-top box maker at least $215 million to settle litigation and acquire rights to use TiVo's intellectual property.
The settlement, announced Tuesday, marks the latest gain from a string of lawsuits brought by the Alviso, Calif., company. TiVo, a pioneer in devices known as digital recorders, or DVRs, has long accused many of its rivals of violating its patents.


TiVo shares leapt 13.2% to $10.10 after hours Tuesday, while AT&T rose 6 cents to $30.44.


Tom Rogers, TiVo's chief executive, said the settlement both underscored the value of his company's intellectual property while also avoiding the "significant legal expenses" that would come from a trial.
"People will begin to view our intellectual property value with some greater predictability," he said.
Under the terms of the settlement, AT&T agreed to pay TiVo $51 million upfront and $164 million in guaranteed payments through July 2018. AT&T will also pay incremental license fees based on subscriber numbers through that time should its own DVR subscriber base exceed certain levels, TiVo said.


AT&T declined to comment.


The patent-licensing agreement between TiVo and AT&T settles all outstanding litigation between the companies, which will cross-license each other's advanced-TV patents. It ends another legal dispute over the technology at the core of TiVo's business.


TiVo has been embroiled in patent lawsuits over its digital recording technology for years. The company originally sued Dish Network Corp. and EchoStar Corp. in 2004, claiming the companies infringed on its "time warp" technology, which allows customers to pause, rewind and fast forward through live television that is simultaneously recorded on a specialized device. Dish and EchoStar agreed to pay TiVo $500 million to settle the lawsuit last May, ending the seven-year long patent dispute.


Alan Gould, an analyst at Evercore Partners, said the relative speed at which the agreement was made—TiVo's lawsuit with AT&T was roughly two years old—bodes well for its ongoing legal tussles with Verizon Communications Inc. and Motorola Mobility Holdings Inc.


"TiVo has agreements with two major players, both using the same patents," Mr. Gould said, referring to TiVo's "time-warp" recording technology.


The company's recent legal successes come as its set-top-box product has also begun to rebound. In November, the company said it broke a four-year streak of declining subscriber numbers in its fiscal third quarter. The company said it added a net 117,000 subscribers compared with a loss of 112,000 a year earlier. The company said many of those subscribers were the result of partnerships with cable and satellite companies that began offering TiVo technology to their customers.

Read more: AT&T Agrees To Pay TiVo At Least $215 Million - WSJ.com
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[Mojo Jojo]

Update: CBS News: TiVo shares soar after AT&T settlement

From CBS News:

[h=1]TiVo shares soar after AT&T settlement[/h](AP) NEW YORK — Shares of TiVo spiked Wednesday after the digital video company reached a patent settlement in which AT&T Inc. will pay it at least $215 million through June 2018.

Per subscriber, the payout will be much larger than a similar, $500 million settlement TiVo reached in May with satellite TV company Dish Network Corp. and its set-top box provider, EchoStar Corp.

TiVo CEO Tom Rogers said Tuesday that the settlement resulted in part from the fact that AT&T heavily marketed its digital video recorders as a key difference between itself and bigger cable TV providers. TiVo makes set-top boxes that record, pause, rewind and fast-forward live TV.

Janney Capital Markets analyst Tony Wible said Wednesday that the settlement is "modestly better" than he expected and estimates that AT&T is paying 83 cents to $1.02 in monthly guarantees per subscriber to TiVo.

Verizon Communications Inc., Wible added, faces a "very similar" litigation against TiVo.

"We have yet to receive claims construction or a trial date but the odds of victory are heavily in TiVo's favor," the analyst wrote.

In a statement, Verizon said that AT&T and Verizon "use quite different technologies, and Verizon believes it has a strong defense to Tivo's case."

TiVo's president and CEO, Tom Rogers, said the company is "extremely pleased to reach an agreement with AT&T, which acknowledges the value of our intellectual property."

"The settlement also provides us rights to innovate TiVo products and services under license from AT&T and allows us to avoid significant legal expenses that we expect would have been incurred by us during and after trial," he added, in a prepared statement.

Shares of TiVo Inc., based in Alviso, Calif., rose 90 cents, or 10.1 percent, to $9.82 in afternoon trading. That's around the middle of the range it's traded the past year, between $7.06 and $12.65.