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 share rose 7 percent and shares flat has increased by 17% in trade early Monday following 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.
TiVo will license its technology flat and EchoStar, while EchoStar would have permitted TiVo some DVR and patents.
TiVo said Monday it will help promote digital video from Blockbuster service flat. TiVo offers already Netflix and other its DVR services. Flat paid 320 million for Blockbuster in an auction in bankruptcy in April.
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 revenue for the calendar year ending 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 expected TiVo to receive.
Some analysts had expected costs of the dish to be as high as $ 3 billion and expect TiVo to strike current potentially rich license agreements.
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.
Last month, a Federal Court of Appeal upheld a ruling for TiVo indicating that EchoStar TiVo patent infringement.
The news came as flat Monday said it has doubled its quarterly profit due to strong subscriber numbers. Second largest supplier of TV satellite of the U.S. posted a net income of 549 million dollars, or $1.22 per share, compared to $ 231 million, or 52 cents a year earlier. Revenues increased by 5.5% to 3.22 billion.
TiVo shares rose 70 cents, or 7.4%, in $10.27 at the beginning of commerce and shares flat has climbed 17 per cent or $4.38, to $29.43.
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