TiVo has announced plans to separate its Product and IP Licensing businesses. The company’s board unanimously approved the move, which will separate the company into two independent entities. TiVo added that it is still open to any alternatives that might create value for each business and it is in active talks with parties interested in each of the businesses.
The separation is still subject to the usual closing conditions, including final approval from TiVo’s board of directors, and follows the company starting a strategic review of its business over a year ago. The move is expected to complete in the first half of 2020 through a tax-free spin-off of the Product business to shareholders.
Interim CEO Raghu Rau said that in a rapidly evolving market landscape, the Product and IP Licensing businesses will be better positioned as standalone separate entities. “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.” Rau said.
The Product business is made up of Platform Solutions and Software and Services businesses. Platform Solutions had an estimated 23 million household users at the end of December. Product generated revenues of USD 401 million in 2018. Separating the business form IP Licensing will give it the freedom to pursue a customer-first strategy without any encumbrances. TiVo also believes the move will accelerate the market adoption of its next generation products and let it develop additional innovative services.
The IP Licensing business includes Rovi and TiVo’s patent portfolios , with 5,500 issued patents and pending applications worldwide. Licensees include traditional and new media video providers across Pay-TV, OTT, mobile, consumer electronics and social media markets. Revenues for the segment reached USD 295 million in 2018. Separating will let this business push its own innovative services and diversify beyond traditional video content discovery and recording domains into new consumer applications and functionalities. The move will also increase flexibility and the unit’s freedom to move into new markets and geographies.
Further details about the separation will be forthcoming in the future, the company said.
Revenues fall in Q1
TiVo reported a mixed set of results for the first quarter, with revenues falling 17 percent from the year before to USD 158.2 million but the operating loss narrowing to USD 8.0 million from 9.0 million. The loss from continuing operations however widened by 37 percent to USD 20.3 million. The adjusted EBITDA sank 37 percent to USD 37.4 million.
The decline in revenues came mainly on the back of its legacy TiVo Solutions IP Licenses, down 100 percent, and Hardware, off 44 percent, as well as from other products, 11 percent lower. Core revenues, excluding the legacy operations, slipped 11 percent to USD 155.8 million. At non legacy Platform Solutions, revenues for the quarter slid 26 percent to USD 71.0 million while at Software and Services, they rose 8 percent to USD 19.9 million.
