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TiVo Jumps 21%: Rovi Merger Would Combine Intellectual Property In Pay TV

TiVo ( TIVO ) stock surged on reports the DVR pioneer is in talks to be acquired by Rovi ( ROVI ), a provider of interactive programming guides to pay-TV companies and smart-TV manufacturers. Shares in TiVo surged 21% in the stock market today  by midafternoon. Rovi stock fell 4%. Both TiVo and Rovi hold intellectual property for features built into pay-TV set-top boxes and garner licensing revenue. Rovi and TiVo face big changes among their customers as the pay-TV industry faces growing competition from Internet video providers, such as Netflix ( NFLX ), Alphabet -Google’s ( GOOGL ) YouTube as well as new TV hardware from Apple ( AAPL ) and Roku. Federal regulators aim to open up the set-top box TV market . TiVo shareholders would reportedly get cash and stock in the deal and own about 30% of the newly formed company. TiVo has expanded beyond hardware sales and patent licensing to online subscription services. TiVo’s customers include small and midsize pay-TV companies. Analysts have said TiVo aims to provide more cable firms with next-generation features, including its cloud platform and mobile apps, analysts say. Apple and Google have been among companies rumored to be interested in acquiring TiVo in the past. Rovi gets an IBD Composite Rating of 86 out of a possible 99, though today’s drop puts it below its key 50-day moving average. TiVo holds just a 26 Composite Rating. “Together, the combined TiVo and  Rovi entity would have more than 6,000 issued or pending patents,” said Mike McCormack, a Jefferies analyst, in a research report. “TiVo alone has generated around $1.6 billion of settlements to date from patent enforcement lawsuits vs. Dish Network ( DISH ), AT&T ( T ), Verizon ( VZ ), and Cisco-Motorola-Time Warner. There are 380 issued patents in TiVo’s portfolio, plus 340 pending patents, many of which expire beyond 2018.”

Mom Survey: Upside For Netflix, Toy Makers, Disney In Media Trends

Netflix ( NFLX ) has a growing audience among kids, and there’s upside in merchandising for programming partners Dreamworks Animation, Walt Disney ( DIS ) and others, says a Piper Jaffray report on trends in family media and toy purchases. According to the Piper Jaffray survey of 428 mothers on media and consumer products, Netflix accounted for 19% of kids’ video viewing, up from 14% a year earlier. “We believe Dreamworks ‘ ( DWA ) massive output deal to Netflix positions the company right in the center of a paradigm shift in youth entertainment,” said Stan Meyers, a Piper Jaffray analyst. Netflix has been investing in kids’ programming , including deals with Disney and Dreamworks. Piper Jaffray has buy ratings on Dreamworks, Disney and toy-maker Hasbro ( HAS ). It rates Mattel ( MAT ) at neutral. UBS, meanwhile, initiated coverage on toy makers Thursday, rating Mattel a buy with a price point of 36. UBS rates Hasbro neutral. IBD’s Leisure Toys-Games group is ranked No. 47 out of 197 industry groups. Hasbro has a Composite Rating of 94 out of a possible 99, while Mattel’s CR is 87. According to the Piper Jaffray survey, frequent moviegoers spend $481 annually on toys, 90% more than the occasional moviegoers. Nearly 80% of mothers picked Disney and its Pixar unit as their most preferred brand when selecting a film for their child.

Apple Gains In Morgan Stanley Online Video Survey, Netflix Tops

Most cord-cutters still replace cable TV services with Netflix ( NFLX ) — no surprise there — but Apple TV gained in an annual Morgan Stanley survey of consumers who watch Internet video. Apple ( AAPL ) rolled out its fourth-generation TV hardware in late 2015, but it has shelved plans, at least temporarily, for a Web-based TV service amid stalled negotiations with programmers. The Apple TV streaming device costs from $149 to $199. Apple customers can subscribe to Netflix, HBO and full-season sports subscriptions as well as watch movies and TV shows served up from the iTunes store. Among those planning to cancel pay TV subscriptions, some 35% of the 2,500 consumers surveyed say they are most likely to switch to Netflix, says Morgan Stanley.  That’s down from about 40.7% in the year-earlier study. Apple TV moved up to 23%, from about 17% a year earlier. YouTube, the video website of Alphabet ( GOOGL )-owned Google figures two ways in the survey, in which respondents could give more than one answer. Some 20% of respondents said they might replace pay TV with YouTube Red, the new subscription service, while 29% cited the free, ad-supported version of YouTube. Amazon.com ’s ( AMZN ) online video service and Hulu were tied at 27%, with Time Warner ’s ( TWX ) HBO Now service right behind, with 25% of pay TV subscribers saying they were likely to switch to the service. “Among those without a pay TV subscription, Netflix usage is meaningfully higher (47%) vs. Amazon Instant Video (21%), suggesting Netflix is viewed as more of a replacement service to traditional pay TV,” said the Morgan Stanley report. “Netflix remains the leading online video platform for TV/film content in the US, with 40% of respondents saying that they use the service, still well ahead of YouTube (33%), Amazon Instant Video (22%) and Hulu Plus (14%).” Hulu is a joint venture of 21 st Century Fox Entertainment ( FOXA ), Walt Disney ( DIS ) and Comcast ( CMCSA ).