Rovi Makes Move into Connected TV VOD? Acquires Sonic Solutions for US$720 Million

Posted by Richard Kastelein in Breaking News on December 24, 2010  |  0 Comments More from this author  |    |  Follow Richard Kastelein on: Facebook | LinkedIn | Twitter | YouTube

Sealed and signed - Rovi Corporation (NASDAQ: ROVI) and Sonic Solutions (NASDAQ: SNIC) have announced that the two companies have signed a definitive agreement for Rovi to acquire Sonic in a stock and cash transaction with a value of approximately $720 million. The acquisition is structured as an exchange offer for all of the outstanding shares of Sonic common stock, to be followed by a merger and this deal will put the heat on both US-based Netflix and the UK's Lovefilm.

This marriage deal piles on Rovi with a slew of consumer-level products and technologies a space that it's previously avoided. Rovi has been known for focusing on the business end of media with offerings like programming guides for service providers, anti-piracy protection for content producers and a digital content solution for online stores and portals. This is a bold move.

"Rovi and Sonic share a vision for the future of digital entertainment and how to deliver the best consumer experience possible," said Fred Amoroso, president and CEO of Rovi Corporation. "We believe Sonic has built an exciting portfolio that complements Rovi's TotalGuide as well as our broad portfolio of solutions. Together, we believe the two companies will be able to address the expanding digital entertainment market with unique capabilities that will bring enhanced value to consumers."

"The digital entertainment sector is transforming at a faster rate than just a year or two ago and consumers are seeking new ways to discover and enjoy digital content, specifically premium content." said Dave Habiger, president and CEO of Sonic Solutions. "By joining forces with Rovi, we will provide the industry with a broad range of solutions that strengthens our customers' ability to compete as consumers' primary source for digital entertainment. For our Hollywood studio partners, eager to expand digital delivery, the larger footprint of our combined company enables them to market their content broadly."

Mediapost notes:

The deal is likely related to Apple's Apple TV efforts, which will let users rent TV shows and movies and play back content purchased through iTunes.

Rovi, a provider of next generation guidance solutions including TotalGuide, discovery, metadata, advertising and networking technologies and Sonic, a provider of digital video processing, playback and distribution technologies, both leaders in the digital entertainment industry, together will bring an end-to-end solution that enables integration across the ecosystem. The acquisition of Sonic will enable Rovi to broaden its solutions to content owners, device makers, retailers and operators.

Sonic has licensed its industry leading cloud-based digital media delivery infrastructure known as RoxioNow, to major retailers, movie studios and CE manufacturers and RoxioNow incorporates a catalog of over 10,000 movies and TV programs, which are accessible through connected CE devices such as digital televisions, Blu-ray players and mobile phones. The RoxioNow technology is expected to be on over 30 million connected devices by June 2011. Sonic's DivX offering is distributed in over 350 million CE devices. The DivX player software has been downloaded over 100 million times per year and 500 million times cumulatively, and has had over 2.5 billion launches since 2009. Sonic's broad offerings coupled with Rovi's guide software and metadata will generate an expanded solution and a richer user experience. With a footprint spanning hundreds of millions of devices and households, Rovi believes this will expand its advertising distribution opportunity.

The combined company will be able to power the next generation of digital entertainment offerings with content discovery, delivery, and enhanced interactivity capabilities that support advertising and drive consumer engagement. Integration between RoxioNow and TotalGuide has already occurred as part of the TotalGuide general availability release – RoxioNow's retail customers are supported through TotalGuide. In the future, Rovi expects to power RoxioNow's user experience with the same web services that power TotalGuide. Rovi believes this integration will result in accelerated uptake of premium content.