In an effort to speed up its evolution to cloud-based software-as-a-service (SaaS) offerings, TiVo announced this morning that was buying search and recommendation vendor Digitalsmiths for $135 million in cash.
Once it passes the customary closing conditions, the deal is slated to close in the first quarter of fiscal 2015.
"The Digitalsmiths acquisition opens new opportunities to commercialize and deploy TiVo's cloud based services and technologies to operators, in an extremely cost effective way that can be offered either independently or in conjunction with TiVo's renowned user interface," said TiVo CEO and President Tom Rogers. "Additionally, Digitalsmiths contributes expertise, data opportunities, and approaches that complement and extend TiVo's extensive work in advanced television to customers seeking search, recommendations, and portability.
“Our acquisition of Digitalsmiths will expand TiVo's role with tier-one U.S. service providers through its significant relationships with the seven of the top-10 U.S. pay-TV providers, which serve 64 percent of the country's pay-TV households. Finally, we believe Digitalsmiths' revenue growth trajectory and attractive margin structure can help accelerate TiVo's long-term Adjusted EBITDA growth."
Digitalsmiths said its cloud service handled 90 million transactions in July of last year before growing to almost 150 million in December 2013.
"The Digitalsmiths team is excited to be part of TiVo," said Ben Weinberger, CEO and co-founder of Digitalsmiths. "Both Digitalsmiths and TiVo share an acute focus to improve the consumers' viewing experience, and we understand the importance of the 'service' or 'cloud' to achieve this goal through next generation personalized video discovery solutions. I look forward to working as part of the TiVo team to provide a best-in-class product set to service providers, consumer electronics manufacturer's and content providers."
Digitalsmiths has an announced deal in place with Time Warner Cable. Time Warner Cable is using Digitalsmiths’ “Seamless Discovery” technology for video discovery functionality across live TV, on-demand and VOD.
Other Digitalsmiths customers include Cisco and Technicolor, both of whom own a stake in the company, Paramount, Warner Bros., the NBA, the PGA, Turner Sports, Zeebox, Sharp and NASCAR.
Digitalsmiths’ platform marries search and recommendations with the ability to aggregate, normalize and leverage disparate data sets in real time. In addition to ensuring accuracy and personalization, Digitalsmiths said its Seamless Discovery's data management technology also helped address major data integrity issues.
Digitalsmiths competitors include ThinkAnalytics, which is deployed with Cox Communications, and Jinni, the latter of which also counts Time Warner Cable as a customer.
Late last year, The Tribune Co. bought Sony Corporation of America’s Gracenote subsidiary for $170 million, which added a music metadata service to its portfolio and beefed up its video metadata operation.
Separately, TiVo also announced today that it had increased its stock repurchase authorization by $100 million. TiVo intends to repurchase $100 million in first quarter of fiscal 2015.