Contact: Scott Denne
TiVo puts its disproportionately large treasury to work, picking up Digitalsmiths for $135m in cash, in a deal that furthers its aims of becoming a software business. Following years of patent-infringement battles over its live TV recording patents, the company had accumulated just over $1bn in cash and securities ahead of this transaction.
Now that most of the patent-licensing deals that built up that cash are behind it, TiVo is transitioning from a reliance on patent-licensing fees and set-top box sales toward a software-focused business, with cable companies as its main customers. The amount of cash at its disposal and its changing business model has had plenty of bankers eager to pitch potential acquisitions to the company, despite TiVo’s conservative history. The company hasn’t made a purchase since its $20m acquisition of ad analytics company TRA in July 2012 and before that you’d have to go back to March 2005, when it picked up a portfolio of patents from IBM.
Digitalsmiths, which sells content discovery software for cable providers and set-top manufacturers, lines up with two of TiVo’s priorities. As a SaaS offering, it helps TiVo move one more step away from its roots as a set-top box vendor and toward a software business. It also provides another offering for cable customers as TiVo looks to rely less on direct-to-consumer sales.
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