Verizon to Pay $250 Million to TiVo in Patent Settlement

TiVo has turned to litigation to generate revenue from licensing fees as it struggles with competition from low-cost rivals.

Analysts said the settlement could bode well for a TiVo victory in cases against other companies, including Time Warner Cable and Motorola Mobility, which is now owned by Google. TiVo reached a similar deal in January with AT&T, which agreed to pay $215 million.

TiVo also prevailed in a similar case against Dish Network and EchoStar in May 2011. Verizon declined to comment and referred questions to TiVo.

Regarding the continuing legal cases, “Verizon has set a strong precedent for Motorola to settle,” said Todd Mitchell, an analyst at Brean Murray, Carret, a boutique investment bank.

TiVo sued Time Warner Cable in connection with the Motorola litigation, and Monday’s settlement only improves the company’s position, according to Barton Crocket, an analyst at Lazard Capital Markets.

“It also potentially sets the stage for a similar settlement with Time Warner Cable over the next year or so,” Mr. Crockett said.

Time Warner Cable declined to comment on Monday. Motorola Mobility had no immediate comment.

TiVo said Verizon would initially pay $100 million in cash, and recurring quarterly payments totaling $150.4 million through July 2018.

As part of the deal, the companies were discussing having TiVo boxes carry a new Internet video streaming service that Verizon is developing with Coinstar’s Redbox to compete with Netflix. TiVo’s DVRs already feature video services from Netflix and Amazon.com.

In addition to the guaranteed compensation, Verizon will pay TiVo license fees on a monthly basis through July 2018 for each Verizon DVR subscriber above a certain 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 appears to refer to a nonexclusive deal for Verizon to offer TiVo boxes to customers, according to Mr. Mitchell of Brean Murray.

The companies also agreed to dismiss all pending litigation between them.