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TiVo's Netflix Contract Demonstrates The Strength Of Company's Patent Portfolio

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TiVo's Netflix Contract Demonstrates The Strength Of Company's Patent Portfolio
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TiVo Corp (NASDAQ: TIVO) announced after the close Monday that it had entered into a licensing agreement with Netflix, Inc. (NASDAQ: NFLX). The agreement covers product and IP licensing solutions.

JPMorgan’s Sterling Auty maintains an Overweight rating on TiVo, with a price target of $34.

The Netflix Contract

“The licensing deal eliminates the ongoing legal battle between the companies over the ROVI patents,” Auty mentioned.

The analyst believes the agreement shows the combined strength of the TiVo and Rovi patent portfolio, which has “broader applicability.”

TiVo is likely to be able to leverage the agreement with Netflix to work on signing OTT providers it has yet to sign.

“The deal is a positive as it adds incremental revenue, although not huge at first, and eliminates the legal costs associated with Netflix litigation,” Auty went on to say.

Details Of The Agreement

Under the product agreement, TiVo would continue to integrate Netflix into its set-top boxes, enabling consumers to benefit from “unified search and Netflix button on remote controls.”

In addition, a separate intellectual property agreement provides a license to Netflix to the TiVo and Rovi patent portfolios for the over-the-top (OTT) offerings.

TiVo did not disclose any financial terms associated with the agreement, although the company reiterated its FY 2016 guidance.

At last check, Netflix was up 1.01 percent at $118.11, and TiVo was up 1.2 percent at $21.

Image Credit: By Jared C. Benedict (Own work) [GFDL, CC-BY-SA-3.0 or 2.5-2.0-1.0], via Wikimedia Commons

Latest Ratings for TIVO

DateFirmActionFromTo
Jun 2016MKM PartnersDowngradesBuyNeutral
Dec 2015BarclaysMaintainsEqual-Weight
Mar 2015MacquarieInitiates Coverage onOutperform

View More Analyst Ratings for TIVO
View the Latest Analyst Ratings

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