Analyst: Google's Motorola Deal Good for Media Giants, TiVo, Bad for Netflix

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Janney's Tony Wible argues that the Internet company's biggest acquisition ever could make it "a substantial new buyer of content," make TiVo an acquisition candidate and create new challenges for Netflix.

NEW YORK - A day after Google unveiled a $12.5 billion deal to acquire Motorola Mobility, Wall Street on Tuesday continued to discuss its possible fallout.

In first reactions on Monday, observers had said that the planned acquisition could, among other things, help strengthen the Internet giant's Google TV platform, which allows TV viewers to access online video, but which has seen slow consumer adoption.

Janney Montgomery Scott analyst Tony Wible said that Google's largest deal ever along with other recent investments are "an incremental positive for TiVo and big media names (Disney, Viacom, Time Warner, DreamWorks Animation) and a negative for Netflix."

As far as entertainment giants go, the planned Motorola acquisition and the recent purchase of SageTV, whose software offers DVR and place-shifting features that could enhance Google TV, "signal that Google is more committed to the TV market," Wible argued. "Investments in compression technology, new IPTV ad models and recent hires also suggest the company is looking to build a sizable TV operation."

Google could also look to become more of a video play - and challenger to Netflix - with content licensed from sector biggies. Wible said that in that scenario the company could "be a substantial new buyer of content looking to leverage Motorola Mobility distribution, but will need to balance the tension between buying content directly that could be seen as a threat to Motorola's current multichannel video programming distributor (MVPD) customers."

Wible's conclusion: "Google's entrance is an incremental positive for content owners, as added competition should improve the value of content."

Meanwhile, the acquisition of Motorola Mobility could also set TiVo up as an acquisition candidate, according to the analyst. "Motorola Mobility has a large liability exposure to TiVo's patents in the rapidly approaching DVR infringement trial - TiVo has high probability of winning," he said. In that context, Google could see strategic value in owning the company's DVR patents, he explained.

Even if Google doesn't look at buying TiVo, the latter could benefit. Given Google's recent moves, some MVPDs could feel threatened and "opt to move to more benign IPTV platforms like
TiVo," Wible argued.

However, streaming video powerhouse Netflix could see yet another challenger emerge in Google. "We see the Motorola Mobility deal as a commitment to the TV market and continue to see Amazon, Google and Apple as emerging players in the IPTV business," Wible said. "We believe the aforementioned names can run [their] IPTV business as a loss leader to grow and/or protect their core operations."


Twitter: @georgszalai