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Charter Communications-ARRIS Sign JV to Buy ActiveVideo - Analyst Blog

Zacks Equity Research
Updated

U.S. cable multi service operator (MSO) Charter Communications Inc. CHTR recently inked a joint venture (JV) agreement with leading video and broadband gear manufacturer, ARRIS Group, Inc. ARRS for the acquisition of ActiveVideo Networks – a provider of cloud-based interfaces and applications.

The purchase price of ActiveVideo stands at around $135 million. Per the deal, ARRIS will hold 65% of the joint venture company and will work as the sales channel partner for ActiveVideo's CloudTV platform. The deal is expected to be sealed in the second quarter of 2015, subject to regulatory approvals.

Notably, ActiveVideo's CloudTV platform allows delivery of next-generation user interfaces, video-on-demand content and interactive advertising for TV to millions of set-top boxes and connected devices by virtualizing consumer premises equipment (CPE) functions in the cloud.

Interestingly, Charter Communications has been using ActiveVideo's platform to power its novel, fully featured, cloud-based Spectrum Guide. The company expects to launch Spectrum Guide on its Worldbox, as well as on other legacy set-top boxes currently deployed within its coverage area.

Similarly, ARRIS plans to speed up adoption of ActiveVideo's technology by capitalizing on its service provider relationships, worldwide reach and existing portfolio of CPE customers. Moreover, the deal should also help ARRIS in further extending its long-standing business ties with Charter Communications.

ActiveVideo boasts a remarkable customer base which includes leading U.S. cable MSOs – Cablevision Systems Corporation CVC and Time Warner Cable Inc. TWC. In addition, it serves Liberty Global plc LBTYA – the leading cable MSO in Europe and several other notable companies globally.

Thus, we believe the move to buy ActiveVideo is a strategic fit for both Charter Communications and ARRIS. While the former would be in a position to shore up the continual innovation and marketplace implementation of ActiveVideo's solutions, the deal should help ARRIS in strengthening its patent cloud portfolio further.


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