FCC's Charter/Time Warner Deal Does Not Impact Rovi (ROVI) - B. Riley

B. Riley analyst, Eric Wold, highlights why the FCC pushing out the review deadline between Charter (NASDAQ: CHTR) and Time Warner (NYSE: TWC) will likely not effect Rovi. No change to $23 PT or Buy rating.

According to Bloomberg, the FCC has pushed out its review deadline of the proposed merger between Charter Communications and Time Warner Cable by two weeks.

There are three key things to keep in mind here with respect to any potential impact on ROVI:

1) Both CHTR and TWC are existing licensees of ROVI’s IP

2) the CHTR license renewal announced in early 2015 automatically included the provision to roll any acquisitions made by CHTR into that license renewal (which would include TWC at attractive terms to ROVI)

3) while the TWC license was scheduled to expire in September 2015, the two sides announced an extension at the same terms through March 2016 (to account for any potential delays in FCC approval of the merger).

If the FCC approval process moves beyond March 2016, it is entirely possible TWC and ROVI would need to extend the license once again to a later date (which we do not think would be an issue given the prior extension…and would avoid any lapse in license revenues during 2016).

If the FCC ends up not approving this merger, then ROVI would merely need to reach a separate license agreement renewal with TWC outside of the CHTR renewal (that would have covered it).

Given the successful extension already agreed to between ROVI and TWC and other successful renewals reached recently (at attractive pricing terms) with others, we would not see this as a major roadblock or one that would require a lengthy negotiating period.

For an analyst ratings summary and ratings history on Rovi Corp. click here. For more ratings news on Rovi Corp. click here.

Shares of Rovi Corp. closed at $17.09 yesterday.

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