NEW YORK (Reuters) - Dish Network and EchoStar Corp. will pay TiVo Inc. $ 500 million to settle a trial for patent infringement involving TiVo recording technology video, putting an end to a long and costly legal battle.
TiVo sharing pink flat 5 percent and shares soared 15 percent on Monday after the announcement.
Dish and EchoStar, both controlled by Charlie Ergen, will make a first payment of $ 300 million to TiVo, with remaining $ 200 million to be paid in six equal annual instalments between 2012 and 2017, the companies said in a statement.
TiVo will license its technology flat and EchoStar, while EchoStar would have permitted TiVo some DVR and patents.
Revenue from the distribution of $ 500 million "changing the profile of TiVo gains very substantially," Chief Executive Tom Rogers said in an interview. TiVo had previously been awarded $ 100 million in a previous payment, bringing the total payment of the prosecution to $ 600 million, said TiVo.
TiVo annual revenues for its last fiscal year ended January 31, 2011, was about $ 168 million.
Rogers said Monday agreement puts in place the well of the company to succeed awaiting prosecution for infringement of patent with AT & T, Verizon and Microsoft.
"Everyone knows that Charlie Ergen is the toughest autour litigant and the fact that he arrived at half a billion (in dollars) settlement should send signals to the rest of the industry,"says Rogers."
Monday regulation benefits all parties, said Kaufman Bros Analyst Todd Mitchell.
"It is positive for the dish in the sense that they have finished with this case and it is positive for TiVo because she will receive a lump sum of cash, she needed to finance their business," Mitchell said.
Mitchell added that the payment would have "no significant impact" on the balance in cash of the dish. He said the amount was within expectations, but acknowledged that it was less than what most Wall Street analysts expect TiVo to receive.
The dates back to 2004, when TiVo accused TV satellite Dish Network Provider EchoStar violate TiVo patents for software of the anachronism that allows users to save a television program while watching another legal battle.
STRATEGY OF FLAT?
Under the agreement, said TiVo flat help promote digital video from Blockbuster service. Flat paid 320 million for Blockbuster in an auction in bankruptcy in April. He also said that Michael Kelly, Executive Vice President flat, would become the President of Blockbuster.
A telephone conference, Ergen told analysts that the company was still assessing whether close 1,700 BLOCKBUSTER stores, saying depend of trafficking, it is capable of hitting with movie studios.
The Blockbuster deal was the latest in a series of acquisitions led by Ergen. Earlier this year, flat said it would expand its spectrum by the acquisition of DBSD North American broadband while sister of flat company, EchoStar, said it would buy Hughes communications, a satellite communications company.
Ergen interviewed analysts on Monday on the frenzy of purchases, but the Executive Conference call was vague, insisting that it employed a "Seinfeld strategy", or a plan that seems illogical at first but later meets.
Seinfeld is a show of popular American television between 1989 and 1998, who played the comedian Jerry Seinfeld.
"I think that everything we do has a purpose, and we have the impression this is finally together", said Ergen.
One analyst said that investors should not worry about the flat how manages its new assets, since they were affordable and the company offered few options beyond its satellite TV business.
"These agreements were not expensive or clearly imply enormous capital and flat amounts buys a certain degree of flexibility and options here," said analyst Collins Stewart Thomas Eagan
The news came as flat said that it had doubled its quarterly profit by Subscriber in the first quarter numbers. Most analysts expected the company to lose subscribers. Revenues increased by 5.5% to 3.22 billion.
TiVo shares rose by 5% to $10.05 and flat shares increased by 16.2% to $29.10 in afternoon trading.
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