Paris-based replicator and entertainment technology developer Technicolor announced that it sold its stake in ContentGuard Holdings yesterday, Sept. 29. Technicolor sold its 25.7% stake in the developer of digital rights management technology for $24.4 million to Pendrell Technologies.
Pendrell Technologies, a subsidiary of Pendrell Corp, acquired 90.1% of ContentGuard for $90.1 million, leaving Time Warner Inc as the only other stakeholder with 9.9%. Time Warner will be entitled to appoint a representative to the ContentGuard board of directors. Pendrell is an intellectual property firm, which recently changed its name from ICO Global Communications.
ContentGuard was originally spun out of Xerox PARC in 2000, operating as a “pioneering inventor and developer of foundational DRM and content distribution which enable the creation of new digital content business models and enterprise content security solutions.” Their DRM technologies are used in many mobile phones, tablets, set-top boxes, e-readers, game consoles, and DVD players. Before the deal, ContentGuard’s majority shareholders included Microsoft and Technicolor.
With the deal, Technicolor will record a capital gain of an estimated $11.5 million and will apply the net disposal proceeds of $24.4 million to the prepayment of the Technicolor’s reinstated debt. While Technicolor is not in the same financial straits as disc replicator Cinram who engaged the services of financial ad-visor Moelis & Company, Technicolor experienced a significant stock price dip of 15% earlier this month.
As part of the deal, Pendrell will get 260 digital rights management (DRM) patents and 160 pending patents, which are licensed by numerous tech companies, such as LG Electronics, Microsoft Corp., Nokia, Panasonic, Sharp, Sony, Sony Ericsson, Toshiba, Technicolor, Time Warner Inc. and Xerox Corp. As ICO Global, Pendrell developed satellite communications businesses; however, now the company is divesting its satellite assets to specialize in intellectual property solutions for companies.
“With approximately 50% of handsets worldwide licensed by ContentGuard, and substantial historical revenues, ContentGuard’s patent portfolio is well-proven,” said Pendrell CEO Ben Wolff. “We believe that ContentGuard’s DRM technologies set the standard for protecting content in virtually every instance where content is transferred to a connected device, from mobile phones to tablets, set-top boxes, e-readers, game consoles, DVD players, personal computer and televisions.”