×
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.

More Digital

  • Nancy Pelosi

    Facebook on Defensive Over Fake Pelosi Video

    Facebook faced growing criticism this week over its decision not to remove a video that was doctored to suggest that House Speaker Nancy Pelosi was intoxicated during a recent public event. The video, which has been viewed more than 2.5 million times, had been slowed down notably, giving the impression that Pelosi was slurring her [...]

  • Little-Black-Mirror-Maia-Mitchell

    Netflix Launching 'Little Black Mirror' Video Series Starring Maia Mitchell, Lele Pons, Rudy Mancuso, Juanpa Zurita and More

    To promote next month’s premiere of “Black Mirror” season 5, Netflix is launching a short video series — “Little Black Mirror,” with a cast that includes an ensemble of Latinx social-media stars. The three “mini-stories,” aimed at Spanish-speaking audiences, are inspired by the tech-dystopian universe of Charlie Brooker and Annabel Jones’ anthology series. “Little Black [...]

  • Twitter

    Twitter Permanently Bans Anti-Trump Krassenstein Brothers, Who Deny They Broke Platform's Rules

    Twitter permanently suspended the accounts of Ed and Brian Krassenstein — progressive political activists famous for trolling Donald Trump and his supporters — with the company alleging the brothers used bogus accounts to amplify their reach on the platform. “The Twitter Rules apply to everyone,” a Twitter rep said in a statement. “Operating multiple fake [...]

  • Snapchat

    Snap in Talks to License Music to Let Snapchat Users Embed Songs in Posts

    Snap wants to up Snapchat’s music game. The company has been in negotiations with music companies including the big three — Sony Music Entertainment, Universal Music Group and Warner Music Group — to license song catalogs for the Snapchat app, according to two industry sources familiar with the talks, confirming a Wall Street Journal report. [...]

  • T-mobile - Netflix - John Legere

    T-Mobile Passes Netflix Price Hike Through to Subscribers

    T-Mobile is getting ready to raise prices for subscribers who have taken advantage of its “Netflix On Us” promotion: The mobile carrier will begin charging existing customers who have participated in the promotion an additional $2 per month to account for Netflix’s recent price increase. Consumers will see their bill go up starting on 6/2. [...]

  • Oona King

    Snap Hires Google Exec Oona King as First VP of Diversity and Inclusion

    Snap continues to fill out the ranks of its revamped leadership team: The Snapchat parent tapped Oona King, most recently Google’s director of diversity strategy and a former member of British Parliament with the Labour Party, as its first VP of diversity and inclusion. King, who starts at Snap on June 11, is also the [...]

More From Our Brands

Access exclusive content