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Moxi to merge with Digeo

Start-ups Digeo and Moxi Digital say they will be merging and have received funding from lead investor Vulcan Ventures.

Start-ups Digeo and Moxi Digital announced Friday that they will be merging and have received funding from lead investor Vulcan Ventures.

Kirkland, Wash.-based Digeo is an interactive TV services company. Palo Alto, Calif.-based Moxi Digital is a home-entertainment platform company. Vulcan, an investment firm lead by Microsoft co-founder Paul Allen, is partially funding the combined company, and Allen will serve as chairman of the board of the newly merged company.

Moxi Digital spokeswoman Gina Aumiller said the two companies are already acting like a merged company, but she expects the merger to be completed in four to six weeks. The companies said in a statement that they would be known by the Digeo name.

As previously reported, Moxi Digital had been exploring potential merger partners as funding became an increasing issue for the start-up. Moxi Digital would not comment on the amount of funding received from Vulcan, but with that additional funding, the merged company anticipates having enough cash to get through 2004 and possibly reach profitability.

Each company brings something to the table that the other needs. Digeo has already signed deals with Charter Communications and Motorola, while Moxi Digital brings a working relationship with EchoStar Communications.

"This merger gets them into satellite and gets us into cable," Aumiller said.

Moxi was launched two years ago by WebTV founder Steve Perlman. It debuted with a big splash at this year's Consumer Electronics Show, announcing plans to license technology that would allow set-top boxes to access and store digital media such as movies and music.

Digeo CEO Jim Billmaier will become CEO of the new company, and Moxi CEO Rita Brogley will become executive vice president of business development and marketing.

Brogley took on the top spot at Moxi in February after Perlman stepped down to focus his attention on digital media production projects.

Microsoft co-founder and Vulcan owner Paul Allen will serve as chairman of the board. The other board members will include Billmaier, Digeo's chief financial officer; Carl Vogel, CEO of Charter; Vulcan President William Savoy; Vulcan Senior Investment Analyst Edward Harris; and Kevin Fong, a general partner with Mayfield.

Moxi received much buzz for its technology, which would allow set-top boxes to combine television services including a digital video recorder, digital music jukebox and enhanced DVD playback with Internet applications such as instant messaging, e-mail, Web browsing and chat.

Future versions were expected to one day allow consumers to watch television programs on handhelds or download video from camcorders to be displayed on TVs. In January, Moxi announced it was working with EchoStar Communications to develop software that would run on EchoStar's satellite receivers.

But the company saw some upheaval in its board and management. Rumors surfaced earlier this month that Vulcan was ready to buy the company outright for significantly less than the $267 million the company was once valued at.

One source said Moxi had turned down a $100 million offer from AOL Time Warner for exclusive licensing rights to the start-up's set-top box platform. Other companies that had exploratory meetings with the company included computer maker Apple and Vivendi's TV arm, Canal+ Group.