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Cable Technology Feature Article

September 24, 2012

Verizon to Pay Nine-Figure Sum in TiVo Patent Dispute

By Steve Anderson, Contributing TMCnet Writer

Earlier today, TiVo (News - Alert) announced some very, very good news indeed for the company. The news was two-fold but immediately related: not only would TiVo be receiving a whopping $250.4 million payday from Verizon (News - Alert) as the result of a patent litigation settlement, but the sudden, substantial influx of cash also sent TiVo's share prices spiking fully five percent at one point in trading.

When asked, TiVo said that Verizon would initially pay $100 million in cash up front, which would then become a series of quarterly payments through July of 2018, with a combined cash value of $150.4 million, bringing the total to the quarter-billion market previously announced. But even this massive payday isn't just a onetime event; as part of the settlement, Verizon is slated to pay TiVo licensing fees based on the number of Verizon DVR subscriptions sold above a certain number, calculated monthly, until July of 2018 as well.

However, the news wasn't all about what Verizon was paying out; as it turns out, if Verizon were to pursue "certain commercial initiatives" with TiVo, Verizon would get a credit for as much as $29.4 million worth of those payments. Some possible commercial initiatives stated were a distribution agreement between Verizon, TiVo, and Coinstar's Redbox line of DVD rental kiosks to provide streaming video over the Internet, which would be available to TiVo users.

TiVo has actually won several similar lawsuits in the past, including one against AT&T, as well as one against Dish Network and Echostar (News - Alert). TiVo's strategy of pursuing legal matters as a revenue stream has been helpful for the company at large, since product sales are facing serious hurdles thanks to entrants in the market that are offering their own DVR--Digital Video Recorder--systems for significantly lower costs than TiVo has been for some time now. One of the terms of the settlement is that the two companies would dismiss all pending litigation between them as well.

Still, the sheer popularity of the DVR concept shows that the home theater market is still doing pretty well, as people look for inexpensive ways to entertain themselves and are starting to discover the wide array of options available to them at home. TiVo's partial entry into the content provision stakes is an interesting one, though offerings will likely depend on what the studios are willing to license to the TiVo / Redbox / Verizon coalition. It's clear proof, however, that the home entertainment market is one steadily growing and overall, is very impressive to watch.

To find out more about TiVo, visit the company at Video World Conference & Expo, collocated with ITEXPO West 2012 taking place Oct. 2-5, in Austin, TX. Joseph Weber, Vice President, Technology Strategy will be a speaker at the event. Stay in touch with everything happening at Video World Conference & Expo. Follow us on Twitter.

Edited by Brooke Neuman

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