The companies said their combined customer base will include more than 20 cable operates across North America, Europe and Asia-Pacific.
Liberate makes interactive TV software and services for cable and satellite TV networks. Sigma makes software for cable service providers that helps them create, monitor and maintain subscriber services.
Sigma's software focuses more on management and delivery of voice and high-speed data services. Liberate has traditionally worked with video-based, interactive television services. Both companies have also been active participants in CableLabs, a technology consortium for cable system operators in North and South America.
Liberate said Sigma's software will enable it to "simplify operations, enable cross-promotions of premium, telephony and IP broadband data services via enhanced TV."
Liberate will use $20 million of Sigma's cash to help finance the deal, which executives said would not affect current plans to reach pro forma profitability sometime in the second half of fiscal 2003.
The company recorded a fourth-quarter loss of $68.5 million, or 64 cents per share, and said some of its customers were moving "more slowly than anticipated" because of reductions in capital spending.
Liberate has seen somein the past few months, and recently that Chief Executive Mitchell Kertzman was replacing David Roux as chairman of the board and that President Coleman Sisson was joining the board of directors.