* Verizon to pay $100 mln initially, then recurring
* Agreement follows AT&T, Dish settlements
* Settlement bodes well for litigation with Motorola, Time
* TiVo shares rise 4.2 percent; Verizon dips 0.3 percent
By Sinead Carew and Liana B. Baker
Sept 24 TiVo Inc will receive at least
$250.4 million from Verizon Communications Inc as part of
a patent litigation settlement, the video recorder pioneer said
on Monday, sending its shares up more than 4 percent.
TiVo, whose brand is synonymous with digital video
recorders, has had to turn to litigation to generate revenue
from licensing fees as it struggles to fight competition from
Analysts said the Verizon settlement could bode well for a
TiVo victory in cases against other companies, including Time
Warner Cable Inc and Motorola Mobility, which is now
owned by Google Inc.
The settlement, a big victory for TiVo, follows a similar
deal it reached in January with AT&T Inc, which agreed to
pay $215 million.
TiVo had also prevailed in a similar case against Dish
Network Corp and EchoStar Corp in May 2011.
Regarding the ongoing cases, "Verizon has set a strong
precedent for Motorola to settle," Brean Murray analyst Todd
TiVo had sued Time Warner Cable in a lawsuit connected with
the Motorola litigation, and Monday's settlement only improves
the company's position, according to Lazard Capital Markets
analyst Barton Crockett.
"It also potentially sets the stage for a similar settlement
with Time Warner Cable over the next year or so," Crockett said.
Time Warner Cable declined to comment on Monday. Motorola
Mobility was not immediately available for comment.
TiVo said Verizon would initially pay $100 million in cash
and recurring quarterly payments totaling $150.4 million through
As part of the deal, the companies are discussing having
TiVo boxes carry the new Internet video streaming service
Verizon is developing with Coinstar Inc's Redbox to
take on Netflix Inc. TiVo's DVRs already feature video
services provided by Netflix and Amazon.com Inc.
Besides the guaranteed compensation, Verizon will pay TiVo
license fees on a monthly basis through July 2018 for each
Verizon DVR subscriber above a certain agreed-upon number.
If Verizon and TiVo pursue "certain commercial initiatives"
by Dec. 21, up to $29.4 million of the payments made by Verizon
would be subject to a credit of an equal amount, TiVo said.
This probably refers to a nonexclusive deal for Verizon to
offer TiVo boxes to customers, according to Mitchell, the Brean
Murray analyst. Verizon declined comment on the settlement or
future agreements, and it referred questions to TiVo.
The companies also agreed to dismiss all pending litigation
TiVo shares rose 4.2 percent to $9.96 in morning trading,
while Verizon was down 0.3 percent at $45.52.