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TiVo Looks for Acquisitions in Data and Ad Sales

Flush With Cash From Patent Settlements and Seeking Targets

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TiVo -- remember TiVo? -- is on the make in Silicon Alley. The California-based DVR pioneer is shopping for acquisitions in New York as it remakes itself into an all-purpose media hub.

"We talk a lot to Silicon Valley companies," said CEO Tom Rogers in a meeting with Ad Age sibling Crain's New York Business this week. "We're looking now in Silicon Alley. Are there companies here we could invest in?"

TiVo packages broadcast, broadband, cable and video on demand in one interface -- a TiVo box. It's increasingly turning its attention toward selling data and advertising -- and that's where it's looking for acquisitions, based on his comments at the meeting.

Mr. Rogers said TiVo is interested in buying companies with data troves or technology that can evaluate the effectiveness of ads or develop new ways for advertisers to hawk their brands.

TiVo has already made one marriage here. Last July, it bought TRA, whose convenient acronym allowed TiVo to rename the company TiVo Research and Analytics. TRA is a venture-backed company that matches consumers' purchases -- via supermarket loyalty cards -- with the television commercials they've seen. TiVo is selling the data to more than 60 agencies, networks and brands, including Proctor & Gamble and Kraft Foods.

Cash is no problem. TiVo has some $600 million in the bank from winning patent fights with EchoStar Communications, AT&T and Verizon, and will likely have more after similar suits against Motorola, Cisco and Time Warner go to trial this spring -- or are settled in advance.

That the company is still around might be something of a surprise to the tens of millions of people who get DVR from their cable providers. Founded in 1997, TiVo made a splash, not only by letting people record television programs for later viewing but allowing them to fast forward through annoying commercials. It ran into a headwind, though, when cable companies started providing -- and making money on -- their own DVRs. Today, TiVo has 3 million subscribers, down from 4.4 million at its peak in 2007.

The damages from the patent litigation, however, have replenished its balance sheet. And the company now has agreements with nine of the top 21 cable providers in United States, including RCN in Manhattan, as well as content providers such as Hulu Plus, Netflix, Spotify, YouTube and Amazon. Users can also stream recorded content to mobile devices and take it with them. TiVo's stock is up to over $12 from its 52-week low of $7.75. With a boost from the $250 million Verizon settlement, the company made a profit in the third quarter of 2012, turning around a loss in the year-earlier quarter.

But it also has a new set of competitors such as Apple and Roku, and emerging models that deliver programming from the cloud. Moreover, convincing consumers outside its cable company agreements to buy a TiVo box is a challenge.

"What's [the] path to market, what is the differentiator and how do they boil it down for consumer adoption?" asked Greg Ireland, an analyst and research manager with IDC.

The FCC guarantees consumers the ability to use any DVR they want. If they want TiVo, they have to get their cable company to take back its DVR. Consumers must then rent a cable card, buy a TiVo box and a subscription online or from a retailer and install it themselves.

"It's a better experience and you save money," said Mr. Rogers at the Crain's meeting. "There are countless ways to get the internet but TiVo is the only one that puts it all together."

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Judith Messina is a reporter for Crain's New York Business.

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