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CMFINC
03-29-2010, 07:06 PM
Could DISH buy TiVo?

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Could DISH buy TiVo?
Could DISH buy TiVo?
Written by Chris Forrester Sunday, 28 March 2010 19:59 A year or so ago conditional access company NDS (then owned by News Corp) was involved in some tough litigation with EchoStar. At the end of the day NDS bought part of Canal Plus Technologies, thereby helping stymie the squabble. Could it be that EchoStar and Dish are planning a similar move on TiVo, and helping Dish to bring its long-running patent litigation to an end?
Here are the facts: TiVo’s share price has rocketed this past week (up 42c on Thursday, 4%, and with more than 5% of its stock traded) and up from around $10 just lately to better than $16 last week. Its 52-week low point of $6.41 would have been a nice moment to buy into TiVo, although today’s market capitalisation of $1.82bn is now hugely expensive and would make any sort of 100% purchase a very costly move for Dish.

Dish Network itself had a more volatile trading week, rising and falling by up to $4 as the market tried to make sense of these rumours. But Dish has also had something of a volatile year, with a 52-week low-point of just $10.77 (and last week’s $20.67 being close to its $22 high). But Dish, despite millions of subscribers, a solid balance sheet and a fine heritage of profit generation, has an official market capitalisation of just $9.3bn. Charlie Ergen and his wife have a significant stake in the business.

Dish and TiVo have been slugging it out in the courts for years, with TiVo winning – to date – every round of what still looks like a 15-Round championship boxing bout. Dish (and EchoStar) are currently facing about $300m in damages, but more worrying is that it might be forced by a court ruling to disable millions of its set-top boxes. This element could be hugely damaging for Dish. Certainly there are plenty of legal experts who do not expect this situation to turn out well for Dish, although legal counsel being what it is there are also plenty who think that Dish can successfully bypass this particular hurdle.

In truth, only a court ruling will decide, which is why a situation where Dish buys TiVo would – at a stroke- remove the risk, and permit Dish to integrate TiVo (as it has successfully done with Sling Media) into its portfolio of offerings.