TiVo 2009 Annual Report Download - page 104

Table of Contents
20. INVESTMENT IN TGC, INC.
On August 9, 2004, the Company acquired a minority interest in TGC, Inc. ("TGC"), a newly formed independent entity. In exchange for the
Company's interest in TGC, it granted TGC a license to certain aspects of its technology for use in China, Singapore, Hong Kong, Macau and Taiwan. The
Company accounted for its investment in TGC under the equity method of accounting as it owned more than 20% but less than 50% of TGC's equity. No gain
was recognized by the Company for its interest in TGC as there was significant uncertainty as to the realization of a gain due to the start-up nature of TGC.
Accordingly, since the intellectual property licensed had no carrying value on the Company's financial statements, no value was assigned to the Company's
interest in TGC. This transaction did not have a material effect on the Company's results of operations in fiscal years 2010, 2009, and 2008 as TGC's activity
and financial position were not material.
Through TGC, the Company has gained access to high quality, engineering resources for the design and development of additional digital video
recorder platforms. During fiscal years ended January 31, 2010 and 2009 TiVo made no payments to TGC. During the fiscal year ended January 31, 2008, the
Company paid TGC $375,000 for a variety of services including research and development and service fees related to designing and building the Company's
product.
In August 2008, TGC sold all of its assets for an equity interest in LiTV, a newly-formed entity located in Taipei, Taiwan. TGC remains a corporate
entity, with a sole purpose to act as a holding company for the LiTV stock it owns, which amounts to less than 5% of LiTV. As of January 31, 2010, the TGC
stock held by TiVo continues to have no carrying value, and there is no market for the stock.
21. COMCAST AGREEMENT
On March 15, 2005, the Company entered into a non-exclusive licensing and marketing agreement with Comcast STB Software DVR, LLC ("Comcast
STB"), a wholly-owned subsidiary of Comcast Corporation, and Comcast Corporation, as guarantor of Comcast STB's obligations under the agreement. The
agreement was subsequently amended several times, most recently on March 27, 2008. The Company agreed to develop a TiVo service software solution for
deployment on Comcast's DVR platforms. In addition, the Company agreed to develop a TiVo Interactive Advertising Management System for deployment
on Comcast platforms to enable the provision of local and national advertising to Comcast subscribers.
The initial term of this agreement expires on June 30, 2014. The agreement, as amended, provides for eight additional one-year renewal terms beyond
the initial term with certain deployment thresholds beginning after June 30, 2019. Comcast has an option to purchase software maintenance and support.
Comcast is entitled to a credit redeemable for ongoing development work that is based on a percentage of certain fees received by TiVo under the
arrangement. Comcast will pay for any ongoing development work that exceeds the amount of the credit. Under the initial and subsequent Statements of Work
("SOW"s), subject to the attainment of specified deployment thresholds, Comcast is also entitled to recoup over time certain development fees paid to us
through a mechanism effectively resulting in a reduction of certain subscription fees. Comcast is continuing to fund development of the TiVo Experience.
TiVo will have the continuing right to sell certain types of advertising in connection with the TiVo service offered through Comcast, when such advertising
features are developed. TiVo will also have a limited right to sell certain types of advertising on other Comcast platforms enabled with the TiVo advertising
management system, subject to Comcast's option to terminate such right in exchange for certain advertising-related payments.
As part of this agreement, Comcast received a non-exclusive, non-transferable license to our intellectual property in order to deploy the TiVo service
software solution and advertising management system, including certain trademark branding rights and a covenant not to assert under TiVo's patents, which
rights extend only to Comcast Corporation, its affiliates, and certain of its vendors and suppliers with respect to Comcast products and services. Such non-
exclusive, non-transferable license to the Company's intellectual property will, under certain circumstances, continue after the termination of this agreement.
In addition, Comcast is entitled to certain most favored customer terms as compared with other multi-channel video distributors who license certain TiVo
technology. Pursuant to the terms of this agreement, Comcast has the right to terminate the agreement in the event the Company is the subject of certain
change of control transactions involving any of certain specified companies. Acceptance of the delivery of the TiVo service software solution by Comcast
occurred on June 27, 2007 and the TiVo service has launched in its initial market. Comcast accepted the TiVo advertising management system on March 31,
2008. Our statement of works with Comcast provide for continued funding for engineering services in fiscal year 2011 to support these activities.
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