Telecom and media magnate John Malone’s Liberty Media Corp.
is making a play to dominate the interactive television space by combining its OpenTV
unit with iTV advertising and commerce plays ACTV
and Wink Communications.
Mountain View, Calif.-based OpenTV, in which Liberty is a majority owner, said it would exchange about $15 million to $41 million of its stock for all the shares of ACTV.
The actual agreement is to trade between $0.27 to $0.73 worth of OpenTV stock for every share of ACTV stock, depending on whether OpenTV’s stock price rises or falls prior to the merger. If the price of OpenTV stock slips below $0.80, the company will either up its payment to $0.584 worth of stock per ACTV share, or allow ACTV to terminate the merger agreement.
The merger is subject to approval of both OpenTV and ACTV shareholders and to regulatory approval. Englewood, Colo.-based Liberty owns about 86 percent of OpenTV.
OpenTV also agreed to buy Wink Communications, from Liberty, which has owned the firm for less than a month. Liberty bought Wink last month for about $101 million in cash, which will be the sum that OpenTV pays to take control of the unit.
The sale is expected to be completed in the next few weeks, and does not require regulatory or shareholder approval, OpenTV said.
For cable technology and programming giant Liberty, which last month bought its controlling stake in OpenTV, the move continues and clarifies efforts to establish itself as a major behind-the-scenes player in interactive TV.
That’s something of an about-face for Liberty, however, which is now intent on limiting its exposure to the tumultuous iTV space through investments — rather than by taking full operational control of any of the three companies.
In addition to its shift on Wink, Liberty had been in the process of working out a deal to acquire ACTV. The two firms signed a letter of intent to merge in May with Liberty paying about $2.00 per share, but that sum was reduced to $1.65 a share two months later to reflect “changing conditions in both the digital media industry and the broader market.”
“Synergy is an often over-used word, but in this case substantial synergies are expected to result from consolidating the operations of these three independent publicly-traded iTV companies,” said Peter Boylan III, who serves jointly as OpenTV chairman and chief executive of Liberty’s Broadband Interactive Television division. “We are now looking forward to successfully bringing the products of these companies to market in a way that allows customers to depend upon OpenTV for one-stop shopping for quality iTV solutions.”
OpenTV, meanwhile, stands to benefit by having a foothold in both interactive television systems and applications. The company brings to the table its relationships with cable providers that use its back-end technology and iTV operating systems. ACTV and Wink, on the other hand, provide software applications — principally interactive advertising and commerce programs — that run on such systems and on digital set-top boxes.
The firm will have agreements with cable and satellite TV operators that reach 35 million households — 7 million more than prior to the acquisition.
“Through the acquisition of ACTV and Wink, the breadth and reach of our product offerings will be expanded significantly,” said OpenTV Chief Executive James Ackerman. “The OpenTV management team is excited to complete these transactions so that we can offer our global customer base even better iTV solutions while realizing substantial cost savings.”
Ackerman added that the firm is aiming to reach cash flow breakeven within the next several quarters thanks to the acquisitions, and ongoing restructuring.
OpenTV has made earlier efforts to get itself in the market for applications, having previously collaborated with ACTV on the rollout of Digital ADCO, an interactive advertising project undertaken in 2000 with Motorola
The transactions also will enable OpenTV to replenish its cash horde, the bulk of which it’s spending through the purchases. As of last month, ACTV had about $59 million in cash and marketable securities; Wink had about $47 million prior to unspecified contractual liabilities. After the deals, OpenTV said it would have about $160 million in the bank.