TiVo Settles Patent Licensing Dispute with AT&T: Payment in Installments

TiVo settled a patent suit against AT&T for at least $215 million. The undisclosed cross-licensing agreement provides funding through 2018. Details of the agreement specify that AT&T give the company an upfront payment of $51 million, while the rest will be paid in quarterly payments until June 2018. PC Magazine reports that AT&T will pay other licensing fees.

Additional Provision

Another provision requires AT&T to pay further recurring per-subscriber licensing fees, if AT&T exceeds the specified subscriber goals. The settlement guarantees the company a percentage of revenue from projected growth of AT&T U-verse service, provided the expectations materialize.

Previous Settlements

This is the company that pioneered the digital video recorder technology that allows television viewers to record programs to watch later. In May, 2011, the company settled with Dish Network and EchoStar, the company that provides Dish Network's DVR machines. Dish Network settled for $500 million through 2017.

According to Time Magazine, the actual breakdown of the two settlements leaves Dish Network paying less per subscriber because as of the end of September, there were 13.9 million subscribers. AT&T had only 3.9 million subscribers to their U-verse service (which isn't available everywhere,) so the settlement gives TiVo roughly $59.72 per subscriber, where Dish Network winds up paying out $35.97 per subscriber.

Impact on Stocks and Trading

The news prompted a big jump in shares of company stock, causing it to increase by 12.9 percent or 14 percent, according to Reuters. This amounts to roughly $1.15 per share in after hours trading. That brought the value of the stock to $10.07. This followed a drop of five cents the previous day during regular trading, even though trading ended with an overall increase in the markets. AT&T stock rose a mere 21 cents in after hours trading, making the stock worth $30.59 a share.

Not the End of Litigation

Time also reported that TiVo CEO Tom Rogers suggested that they were pursuing a similar case against Verizon and it's FiOS service. The point was that AT&T and Verizon use the DVR as a main part of their marketing and advertising strategies. Founded in 1997, this company developed and introduced the first digital video recorder, ultimately revolutionizing the way Nielsen measured their ratings, and the way people watched their favorite shows. The machine makes it possible for people to record a show when they're away, or record a show while watching something else. These settlements should help them inch closer to profitability, while providing the company with guaranteed funding through 2018, at the very least.

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