TiVo is on a roll. Following a $500 million settlement with satellite TV company Dish Network and its set-top box provider, EchoStar, back in May 2011, TiVo just put the squeeze on cable TV operator AT&T, which is on the hook for at least $215 million through June 2018 to settle a patent lawsuit related to digital video recorder (DVR) technologies.
Under terms of the agreement, AT&T will cut an initial check for $51 million, and then follow that up with quarterly guaranteed payments through June 2018 totaling $164 million, for a combined total of $215 million. The amount could end up being higher based on AT&T's agreement to pay incremental recurring per subscriber monthly license fees if its DVR subscriber base exceeds specific undisclosed levels.
In addition to the cash money TiVo will take from AT&T's pocket, the two sides agreed to make friendly and dismiss all pending litigation between the companies with prejudice. They also cut a cross licensing deal, giving one another access to their respective patent portfolios in the advanced television field, TiVo said.
"We are extremely pleased to reach an agreement with AT&T, which acknowledges the value of our intellectual property," said Tom Rogers, CEO and President of TiVo. "This settlement, on the heels of our recent operational success that has resulted in the growth of TiVo's overall subscriber base, is another major accomplishment for TiVo and we believe a great outcome for our shareholders. The combination of guaranteed payments and future additional fees paid to TiVo in the event that AT&T's pay TV business continues to grow in-line with consensus analyst expectations, represents hard-earned compensation for our IP enforcement efforts. The settlement also provides us rights to innovate TiVo products and services under license from AT&T and allows us to avoid significant legal expenses that we expect would have been incurred by us during and after trial."
AT&T probably feels as though all it does is hand over money to competitors. In addition to this settlement, AT&T still owes T-Mobile billions of dollars as part of a break-up fee that was promised if it failed to acquire the wireless mobile communications company.