Jan 3 (Reuters) - AT&T Inc has agreed to pay TiVo Inc a
minimum of $215 million and additional monthly
licensing fees to settle a patent infringement dispute related
to recording live TV.
TiVo's shares rose 14 percent in after-hours trade.
TiVo, whose brand is synonymous with a digital video
recorders, has turned to litigation to generate revenue from
licensing fees as the industry pioneer has struggled to fight
competition from low-cost rivals in recent years.
The settlement is the second large victory in recent months
for TiVo, which expects fees from AT&T to "significantly exceed"
the guaranteed minimum payment.
TiVo also prevailed in a similar longstanding case against
Dish Network and Echostar Corp in May. The
companies, controlled by Charlie Ergen, agreed to pay TiVo $500
million to settle the dispute.
TiVo CEO Tom Rogers said in an interview that as part of the
settlement, he could not reveal how much more revenue TiVo could
generate from the deal but added "it's a number that has us
holding our head very high."
TiVo will receive additional payments from AT&T that depend
upon AT&T's subscriber base of DVR users meeting certain growth
targets until 2018.
"No matter which projections you take, they all involve AT&T
paying us significantly higher revenue than $215 million,"
Todd Mitchell, an analyst for the firm Brean Murray, said he
estimates AT&T could end up paying potentially 10 or 20 percent
more per year if its TV business keeps growing.
An AT&T spokesman declined to comment.
The same patents involved in the case are a part of a
lawsuit TiVo is embroiled in with AT&T's competitor, Verizon.
Rogers said now that the AT&T case is settled, the parties will
hold a conference and decide on a timetable for the Verizon
He added the AT&T settlement bodes well for the Verizon case
since Verizon's TV service FiOS, like AT&T'S U-verse service,
"has substantially built their business on operating DVRs."
A Verizon spokeswoman did not immediately respond for
comment on Tuesday.
AT&T's first payment of $51 million, which was due Tuesday is
slightly higher than TiVo's forecast for its fiscal fourth
quarter revenue of $48 million to $50 million, announced in
The first payment will be followed by quarterly payments
through June 2018, according to TiVo. In return the companies
have agreed to dismiss all pending litigation and enter a cross
TiVo shares rose 14 percent to $10.18 in after-hours
The lawsuit was TiVo v AT&T in the U.S. District Court,
Eastern District of Texas, no. 2:09-CV-00259.
(Reporting by Sinead Carew and Liana B. Baker)
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