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Funai to distribute Philips TVs in U.S., Canada

The Japanese electronics maker will pay a royalty to sell televisions under the Philips and Magnavox brand names.

As of September, Philips will no longer make televisions for the U.S. and Canada.

Instead, it is transferring that job to Japanese electronics maker Funai. The two companies agreed to a brand-licensing agreement in which Funai will source, distribute, market and sell all consumer TVs under the Philips and Magnavox brand names in the U.S. and Canada.

The deal begins September 1 and is good for five years. Funai will pay a royalty to Philips.

Beginning in September, Funai will distribute all Philips TV in the U.S. and Canada. Philips

"This agreement secures continued presence of Philips and Magnavox branded TVs in North America in a model that safeguards Philips profitability in this highly competitive market," Philips said in a statement Tuesday.

And so begins the thinning of the herd. The television market is becoming an especially tough business, as prices continue to fall and more inexpensive brands like Vizio and Olevia attempt to edge out the traditional market leaders. Pioneer, a leader in plasma TV tech, also recently announced it would sell TVs but no longer make its own plasma panels.

This means that though the Philips brand name will live on in the U.S., the materials inside those televisions aren't necessarily the same. But the biggest blow is to brand perception.

Philips is a top-tier television maker--it won the Best of CES 2008 Best in Show Award from my CNET Reviews colleague David Katzmaier for its Eco TV--and Funai is, well, not as a highly regarded. This is a boon to Funai, and Chief Executive Tetsuro Funai's comment is pretty much the understatement of the year: "As a premium brand, Philips will add lustre to our existing portfolio."

To be fair, Philips has definitely struggled to compete in the flat-panel TV market. Though the company has attempted to differentiate its brand with Ambilight technology aimed at home theater enthusiasts, it still trailed the big guys, like Sony, Panasonic, and Sharp, in both production and panache.