TiVo has agreed to be acquired by Rovi in a deal valued at $1.1 billion. The merger, which had been rumored since last month, will combine the resources of the two companies into one entity to be known as TiVo in a synergistic fashion which aims to capitalize on the two companies' impressive technology patent portfolios.
The possibility of a deal between the two entertainment companies had been rumored since last month when it was reported by The New York Times. Even before that, it appeared as if an acquisition was in the cards for TiVo. The company pioneered the use of DVRs back in the 1990's and was so successful that its name was commonly used as a verb describing the process of making a DVR recording.
TiVo encountered trouble, however, when pay TV and cable providers introduced their own DVRs which were built into the set top boxes customers were required to use to access their programming.
Despite TiVo's universally lauded and vastly superior user interface and remote, most viewers could not be convinced to purchase a separate piece of hardware and pay a separate monthly fee.
The advent of streaming via set top boxes such as Roku and streaming devices like Apple TV, Google, Chromecast and Amazon Fire also hastened TiVo's demise.
While some diehard customers stayed on board, the company shed subscribers rapidly and never returned to its former glory, despite attempts to introduce new products like last year's TiVo Bolt, which promised not only to skip commercials but to compress program length without quality loss using specially developed software.
The company also expanded its software licensing efforts, and the clear synergies between TiVo and Rovi, formerly known as Gemstar-TV Guide, apparently drove the planned merger.
"The combined capabilities of TiVo and Rovi place us in a tremendous position to extend services across platforms and to a customer base that includes traditional, over-the-top and emerging players across the globe. By working together, Rovi and TiVo will revolutionize how consumers experience media and entertainment and at the same time build value for our stockholders," Rovi CEO Tom Carson explained.
The deal involves a combination of cash and Rovi stock in exchange for TiVo shares, the price of which increased substantially after the merger rumors were reported. Overall, the $10.70 per share acquisition price for TiVo accounts for a healthy 40 percent premium above the company's $7.66 share price before the rumors hit the press. The combined companies will now be known simply as TiVo in a nod to the vast consumer awareness of the brand, and will be headed by Rovi CEO Tom Carson.
