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May 9, 2019
Separation Intended to Unlock Shareholder Value and Increase Flexibility in Pursuing Growing Market Opportunities
TiVo Corporation (NASDAQ: TIVO) today reported that the Company’s Board has unanimously approved a plan to separate its Product and IP Licensing businesses.
Based upon an extensive review of strategic alternatives, TiVo’s Board of Directors decided that separating its Product and IP Licensing businesses is believed to be the best strategy to maximize shareholder value. Accordingly, TiVo intends to spin out its Product business to shareholders. Throughout the separation process, the Board of Directors will continue to be open to strategic transactions for each business that could create additional stockholder value and is actively engaged in discussions with parties interested in each of the businesses.
“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, Interim President and Chief Executive Officer. “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.”
TiVo believes the separation of its Products and IP Licensing and business will benefit shareholders for the following reasons:
TiVo’s Product business - Consisting of our Platform Solutions and Software and Services businesses. TiVo offers a suite of component technologies that can be integrated into any of our customers’ internally developed platforms or deployed as an integrated TiVo solution for video service providers or retail markets. As of December 31, 2018, there were an estimated 23 million households worldwide utilizing our Platform Solutions. For the full year 2018, our Product segment generated $401 million in revenue, with a large component of recurring revenue.
For content creators, service providers and consumers, TiVo provides a trusted neutral platform to connect audiences to content and monetize transactions. In addition to offering innovative and market leading solutions to our customers, the keys to the Product business success are scale, trust and neutrality. By separating from our IP Licensing business, we believe that our Product business can pursue a customer-first strategy without the encumbrances or complexity of being tied to an IP Licensing business. We expect that operating independently will open our Product business up to greater receptivity from service providers, content providers and device manufacturers, as well as potential customers in new markets. In particular, as an independent Product oriented company, we believe we can better drive market adoption of our next generation products and develop additional innovative solutions for our customers. TiVo’s Product business is at an exciting time in its transformation, particularly with several new product and business model launches later this year that will enable us to increase footprint, create a new content network and develop increased monetizable opportunities through advertising. Along with our established portfolio of market leading technologies and solutions, these new offerings will be foundational to the long-term growth and profitability of our product business.
TiVo’s IP Licensing business - Our expansive and highly valuable Rovi and TiVo patent portfolios encompass approximately 5,500 issued patents and pending applications worldwide. Hundreds of millions of consumers have access to our innovations through license agreements with leading video providers around the world. Our licensees include traditional and new media video providers across Pay-TV, OTT, Mobile, Consumer Electronics and Social Media markets. For the full year 2018, IP Licensing revenue was $295 million, with a high percentage of this recurring revenue.
We believe the announced separation will enable our IP Licensing business to pursue a broader horizontal licensing strategy and capitalize on emerging growth opportunities. The ability to pursue an independent strategy going-forward will allow the IP Licensing business the freedom to focus on innovating around the new frontiers of video entertainment and communications which are developing beyond our traditional footprint and help to usher in the next phase of the consumer video experience. As video consumption continues to shift beyond traditional Pay TV into internet, social media and mobile domains, we believe it is important that the IP Licensing business can diversify beyond traditional video content discovery and recording domains, into new consumer applications and functionalities. The separation will enable the IP business to strategically reinvest in its own business, not only to solidify its strong, existing foundation, but also to appropriately pursue new long-term growth opportunities. We also expect that operating independently will provide the IP Licensing business enhanced operational flexibility and the freedom to pursue opportunities in new markets and geographies.
Transaction details:
This press release does not constitute an offer to sell or the solicitation of an offer to buy securities, and shall not constitute an offer, solicitation, or sale in any jurisdiction in which such offer, solicitation, or sale would be unlawful prior to registration or qualification under the securities laws of that jurisdiction.
Adeia is a leading R&D and intellectual property (IP) licensing company that accelerates the adoption of innovative technologies in the media and semiconductor industries. Adeia’s fundamental innovations underpin technology solutions that are shaping and elevating the future of digital entertainment and electronics. Adeia’s IP portfolios power the connected devices that touch the lives of millions of people around the world every day as they live, work and play. For more, please visit www.adeia.com.
This press release contains “forward-looking statements” within the meaning of the federal securities laws, including Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements are based on information available to the Company as of the date hereof, as well as the Company’s current expectations, assumptions, estimates and projections that involve risks and uncertainties. In this context, forward-looking statements often address expected future business, financial performance and financial condition, and often contain words such as “expect,” “anticipate,” “intend,” “plan,” “believe,” “could,” “seek,” “see,” “will,” “may,” “would,” “might,” “potentially,” “estimate,” “continue,” “target,” similar expressions or the negatives of these words or other comparable terminology that convey uncertainty of future events or outcomes. All forward-looking statements by their nature address matters that involve risks and uncertainties, many of which are beyond the Company’s control, and are not guarantees of future results.
Forward-looking statements are subject to risks, uncertainties and assumptions that could cause actual results to differ materially from those expressed in any forward-looking statements. Accordingly, there are or will be important factors that could cause actual results to differ materially from those indicated in such statements and, therefore, you should not place undue reliance on any such statements and caution must be exercised in relying on forward-looking statements. Important risk factors that may cause such a difference include, but are not limited to: the Company’s ability to implement its business strategy; the Company’s ability to enter into new and renewal license agreements with customers on favorable terms; the Company’s ability to retain and hire key personnel; uncertainty as to the long-term value of the Company’s common stock; legislative, regulatory and economic developments affecting the Company’s business; general economic and market developments and conditions; the Company’s ability to grow and expand its patent portfolios; changes in technology and development of new technology in the industries in which in which the Company operates; the evolving legal, regulatory and tax regimes under which the Company operates; unforeseen liabilities and expenses; risks associated with the Company’s indebtedness; unpredictability and severity of catastrophic events, including, but not limited to, acts of terrorism or outbreak of war or hostilities, natural disasters and global health pandemics, each of which may have an adverse impact on the Company’s business, results of operations, and financial condition. These risks, as well as other risks associated with the Company’s business, are more fully discussed in the Company’s filings with the U.S. Securities and Exchange Commission (“SEC”), including the Company’s Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. While the list of factors presented here is, and the list of factors presented in the Company’s filings with the SEC are, considered representative, no such list should be considered to be a complete statement of all potential risks and uncertainties. Unlisted factors may present significant additional obstacles to the realization of forward-looking statements.
Causes of material differences in results as compared with those anticipated in the forward-looking statements could include, among other things, business disruption, operational problems, failure to complete licensing arrangements on anticipated terms and timeline, failure to prevail in litigation we may bring against third parties, financial loss, legal liability to third parties and similar risks, and failure to attract or retain employees, any of which could have a material adverse effect on the Company’s consolidated financial condition, results of operations, liquidity or trading price of common stock. The Company does not assume any obligation to publicly provide revisions or updates to any forward-looking statements, whether as a result of new information, future developments or otherwise, should circumstances change, except as otherwise required by securities and other applicable laws.
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