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Rovi buying TiVo?

Two major players in digital media could be combining, according to a report in the NYT. Rovi is, apparently, bidding for TiVo with a mix of cash and stock that would mean the merged company would be owned about 70 per cent by Rovi (current market cap $1.7 billion) and 30 per cent by TiVo (current market cap $750 million).

TiVo is the pioneer of the DVR and after several stops and starts found more success providing the UI for operators than through stand alone retail devices. Rovi is the combination of Macrovision and Gemstar and is focused on embedded Uis and EPG data.

Together, the two companies have more than 6,000 issued or pending patents, which have become a critical defence for them against larger tech and media giants. They are constantly in court defending their patents with often mixed success.

A catalyst for the deal seems to have been the absence of a CEO since Tom Rogers moved to become Chairman last November and the slide in TiVo’s share price while Rovi’s has strengthened. A driving force of the deal is said to be activist investor Glenn Welling of Engaged Capital which successfully won two seats on the board of Rovi last year. Since then, he’s aggressively pushed the company to revaluate its strategy and pressed it to seek a merger with TiVo.

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