TiVo Nets At Least $215 Million From AT&T Patent Settlement

Set-top box maker TiVo (NSDQ: TIVO) announced today that it would rake in hundreds of millions from licensing three of its patents to AT&T (NYSE: T). The deal is a coup for the recordable TV pioneer and could presage more licensing deals in the near future.
The settlement will result in AT&T paying TiVo $51 million upfront as well as a series of quarterly payments, totaling $164 million, through 2018 when the patents expire. The $215 total figure could be augmented by additional top-offs if AT&T’s subscriber base exceeds a given number in coming years.
TiVo first sued AT&T in the summer of 2009 after the phone and cable giant began a offering a competing version of the set-top box that lets viewers record and fast-forward TV shows. After more than two years of procedural wrangling, the case was on the verge of going to trial in East Texas before today’s settlement was announced.
“We are extremely pleased to reach an agreement with AT&T, which acknowledges the value of our intellectual property,” said Tom Rogers, CEO and President of TiVo in a statement.
The settlements could also increase TiVo’s leverage against Verizon which it claims is infringing the same patents through its FiOS TV service. A Texas judge agreed to stay that case in November until early January, citing the related litigation.
TiVo is also tangled in a major suit with Motorola (NYSE: MMI) Mobility which sued the set-top box maker for infringing its patents. TiVo says Motorola filed the suit merely as a retaliatory tactic after TiVo sued its customer, Verizon. A judge agreed to stay the proceedings pending the outcome of the Verizon case.
Both unresolved lawsuits are now in a position to go forward though no trial dates have been set.
Today’s statement also announced that AT&T and TiVo have entered an agreement to cross-license their patent portfolios related to TV technology. The exact terms of the agreement will likely remain confidential and the parties will instead simply file a notice with the court saying they have resolved the litigation.
The upshot of today’s event is that TiVo now has another massive cash infusion following a patent deal last May in which it obtained $500 million from Dish Network (NSDQ: DISH) and EchoStar (NSDQ: SATS). TiVo has slumped in recent years but it reportedly broke a four-year decline in subscriber numbers last November. The extra cash and additional six years of patent protection means it has lots of times to figure out a long-term growth strategy.
TiVo’s shares were up over 10 percent afterhours. More details about today’s announcement can be found here.