TiVo ‘Exploring All Alternatives’ to Drive Shareholder Value

TiVo announced it is “exploring all alternatives” as it looks to maximize value for shareholders, the video tech company announced in its fiscal Q4 results.

TiVo, which has hired LionTree Advisors to help with its evaluation, said options under consideration include “transformative acquisitions,” combining TiVo’s business with other “leading players,” and becoming a private company.

“TiVo’s stock price is at a level that the Company and its Board do not believe reflects the true value of the business given the Company has a strong foundation, with leading technologies, and solid cash flow from its long-term IP license agreements and guide deployments,” TiVo said.

TiVo is exploring those options roughly 17 months after Rovi and TiVo merged in a deal valued at $1.1 billion.  They are also entering play as TiVo continues its patent battle with Comcast. 

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Investors applauded TiVo’s Q4 results and plan to seek alternatives, as TiVo shares were up $1.65 (12.18%) to $15.20 each in after-hours trading Tuesday.

On the earnings call, Enrique Rodriguez, who was named CEO of TiVo in November 2017 (succeeding Tom Carson), said it’s “too early in the process” to say when TiVo expects to complete the evaluation of its alternatives and won't put an "artificial timeline" on it. 

With respect to the ongoing saga with Comcast, “getting them licensed remains one of our top priorities,” Rodriquez said. “I am confident that Comcast will ultimately be licensed to use our intellectual property to the benefit of the business and to consumers." 

As for the near-term, Rodriguez said 2018 will be a “transformational year for TiVo,” and talked up the next-gen, Experience 4 platform launched on retail products last year that combines OTT, linear TV, discovery and voice navigation, and plans to extend it to its platform for MSO customers. Service Electric Cablevision already on board as it looks to replace legacy Rovi guides with the next-gen product.

Rodriguez estimated that there’s an opportunity for much more of that, as there are about 15 million homes using legacy Rovi guides.

He also said that TiVo expects to deploy its next-gen platform on the Android TV platform in the first half of the year, as well as deals where TiVo’s solution is replacing third-party guides.

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As it’s already done on the MSO side of its business, TiVo expects to be largely out of the hardware business on the retail side, as well, as it becomes more solely a software and solutions company, according to TiVo CFO Peter Halt.

On the financial end, TiVo posted total Q4 revenues of $214.23 million, down 15.1%, amid declines in the businesses including legacy TiVo Solutions IP licenses (such as those tied to its Time Warp patent), hardware and other products such as its Anti-Copy Process (ACP) technology for analog video.

Halt noted that legacy TiVo Time Warp revenues from earlier settlement deals will be going away in mid-2018.

Meanwhile, TiVo is getting some deals done with virtual MVPDs, including Sling TV (part of Dish Network), DirecTV Now (part of AT&T), PlayStation Vue and YouTube TV (via an expanded deal with Google.

TiVo is also targeting $110 million in annual run-rate synergies by mid-2018 from the Rovi merger, up $10 million from its previously stated goal.