You will be redirected back to your article in seconds

NeuLion to Buy Video-Tech Firm DivX in $62.5 Million Deal

NeuLion, which provides Internet-video streaming services to sports leagues and other media companies, announced plans to acquire DivX, a developer of video-compression and playback software, in a deal worth $62.5 million.

The deal will combine NeuLion’s managed-video services and DivX’s technology products, which NeuLion said will let it offer customers the option to license a fully integrated Internet video solution and position it to deliver high-quality 4K Ultra HD content in the future.

NeuLion’s deal to buy DivX comes less than a year after Rovi sold San Diego-based DivX for $75 million in March 2014 to private-equity firms Parallax Capital Partners and StepStone Group. DivX claims its video-playback software is used by more than 200 million users on board more than 1 billion devices.

“We are extending our franchise and bolstering our capabilities with our acquisition of DivX’s entertainment and consumer electronics customers, advanced 4K video-enabling technology products and expansive geographic reach,” NeuLion CEO Nancy Li said in announcing the pact.

Customers of NeuLion, based in Plainview, N.Y., include the NFL, NHL, NBA, UFC, Rogers and CCTV.

DivX has licensed its technology to consumer-electronics manufacturers, content owners and cable network operators, including LG, Samsung, Toshiba and Hisense. The company also recently introduced an end-to-end High Efficiency Video Coding (HEVC) solution, a.k.a. H.265, a compression standard that is roughly twice as efficient as H.264/MPEG-4. DivX’s HEVC offering is aimed at driving adoption of 4K Ultra HD video and live-streaming Internet video.

The deal will create a company “likely to emerge as an even more formidable enabler of 4K over-the-top content delivery with DivX bringing CE (consumer electronic) relationships with major global companies such as Samsung and Hitachi as well as strong ties to the Hollywood studios,” Wunderlich Securities analyst Matthew Harrigan wrote in a research note to clients Monday. Harrigan has a “buy” rating on NeuLion stock.

The deal, which has been approved by the boards of NeuLion and DivX, is expected to close in the first quarter of 2015 subject to usual closing conditions.

Upon closing, Li will become executive vice chairman of the NeuLion board and head the technology strategy for the company, while DivX CEO Kanaan Jemili will be appointed CEO of NeuLion. In addition, the management teams and employees of both companies will be combined.

The $62.5 million price tag for the deal comprises $37.5 million in shares of NeuLion common stock and a $25 million two-year convertible note, subject to working capital adjustments. NeuLion said it expects the DivX acquisition to be immediately accretive on an adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) basis, and accretive on an operating income basis for 2016. For the six months ended Sept. 30, 2014, DivX had estimated GAAP (generally accepted accounting principles) revenue of $10.8 million and non-GAAP revenue of $26.6 million, and an estimated GAAP consolidated net loss of $7.4 million and adjusted EBITDA of $3.5 million.

When the deal closes, James Hale, DivX’s chairman and managing partner at Parallax Capital, and John Coelho, a member of DivX’s board of directors and partner at StepStone Group, will join NeuLion’s board. As a result, NeuLion will expand its board to 11 seats.

Popular on Variety

More Digital

  • Podium Publishing Taps Scott P. Dickey

    Podium Publishing Taps Scott P. Dickey as Chief Executive Officer

    Independent audiobook publisher Podium Publishing has selected veteran media executive Scott P. Dickey as chief executive officer. Greg Lawrence, former CEO and co-founder,  remains as Podium’s publisher and a member of the board of directors. As CEO, Dickey will set and implement the day-to-day and long-term marketing, production and business strategy for the company as [...]

  • "The Stockholm Syndrome" - Pictured: Rajesh

    Inside the Blockbuster $600 Million 'Big Bang Theory' Streaming Deal With HBO Max

    As one of TV’s most popular shows of the past 20 years, “The Big Bang Theory” was sure to command a huge price when the streaming rights were finally shopped in a red-hot market for iconic comedies with large libraries. But “Big Bang Theory” wasn’t shopped widely on the open market before the streaming pact [...]

  • Mark Zuckerberg Facebook

    Mark Zuckerberg Can Be Overruled by Facebook's New Oversight Board on Content Decisions

    Mark Zuckerberg, chairman and CEO of Facebook, can’t be ousted by investors — he owns a controlling interest in the company’s voting shares. But according to the social giant, the new Oversight Board — colloquially called Facebook’s “Supreme Court” — that it is setting up to adjudicate appeals about whether to leave up or take [...]

  • YouTube - Google UK Offices

    Google Launches Ability to Find Key Moments in YouTube Videos via Search

    Google has introduced a new way to find exact moments in YouTube videos through its search engine, with initial partners including CBS Sports. According to Google, search results now will provide links to key moments within the video — if, that is, YouTube content creators have provided the necessary timestamp information to Google. “You’ll be [...]

  • Spotify logo is presented on a

    Spotify VP Paul Vogel Talks Subscription Prices, Label Licenses, Podcasts

    The annual Goldman Sachs Communacopia Conference gives representatives from major companies the opportunity to present to the investment community, and Paul Vogel, Spotify’s VP and head of financial planning & analysis, treasury and investor relations, spoke on the streaming giant’s behalf on Tuesday morning. While many of his comments were statements frequently heard in the [...]

  • Directv Now

    AT&T Sued for Allegedly Creating Bogus DirecTV Now Accounts

    A group of investors sued AT&T, alleging the telco artificially inflated subscriber counts for its DirecTV Now streaming service — including by creating fake accounts. In the federal class-action lawsuit, the plaintiffs allege that AT&T wanted to make DirecTV Now seem more successful than it actually was as another way to rationalize its $85 billion [...]

  • Streaming Battle: Disney, Apple and More

    The Battle for Eyeballs Makes for an Action-Packed Streaming Arena (Column)

    It came as no surprise last week that Disney CEO Bob Iger had resigned from the Apple board since the two companies are poised to launch competing subscription streaming services in less than two months. But Iger’s departure (announced the same day that Apple revealed its Nov. 1 launch date and $5-a-month price point) underscores [...]

More From Our Brands

Access exclusive content