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ReplayTV gets $84.9 million infusion as IPO nears

The company, which is one of several at the forefront of the "digital VCR" market, wraps up $84.9 million in financing as a proposed initial public offering approaches.

ReplayTV, one of the companies at the forefront of the "digital VCR" market, has wrapped up an additional $84.9 million in financing as a proposed initial public offering approaches.

The Mountain View, Calif.-based company, which markets a set-top box containing a hard drive that allows consumers to easily record and view TV programs, today disclosed it has received $84.9 in additional financing from a variety of media, entertainment, cable and consumer electronics giants. The list includes Comcast, the broadband division of Motorola, Sega, Matsushita, Excite@Home, Scientific-Atlanta, News Corp., Rogers Communications and Universal Music Group. Most of the investors had not previously been disclosed.

A spokesman for ReplayTV stated that this latest round of financing would likely be the last before an IPO. No date has been set for an IPO. Documents filed with the Securities and Exchange Commission earlier this month, however, state that the company plans to offer 8.5 million shares to the public for $13 to $15 a share.

Although the spokesman declined to state when the IPO will take place, the company earlier this year indicated that it expects to go public in the near future, and with good reason. The convergence of digital technology and television, touted for years, appears to finally be ready to take off.

The devices have somewhat limited functionality now, allowing viewers to record, freeze and pause live TV programming. But massive hard disks and ubiquitous broadband connections will permit customers to download any movie on demand and access huge entertainment libraries with a click of the remote.

Stocks of companies in this market have also met with success. TiVo, Replay's direct competitor, has traded as high as $78.85, although recently the stock has settled into the mid-$30 range.

Liberate Technologies, which develops software for set-top boxes, has risen from a 52-week low of $7.18 to trade at $85 today. The stock has traded as high as $148 in recent months.

ReplayTV, which changed its name from Replay Networks in January, sells a $599 set-top box it calls a personal video recorder, or PVR. The PVR sits on the TV and essentially serves to receive movies or other programs delivered from satellites, cable or broadcasters. The PVR records these programs on the hard drive and then replays them on demand.

Although the company is largely identified with the hardware that sits on top of the TV, profits will likely come from advertising and transaction fees, according to the SEC filing. If a customer views a downloaded pay-for-view program, for instance, the broadcaster or copyright owner would provide a cut of any fees received to ReplayTV, the spokesman said.

"We anticipate generating revenues from the sale of advertisements, media sponsorships, premium subscription services, near video-on-demand services and TV-commerce. We continue to pursue strategic relationships with television programmers, advertising agencies and other potential media partners to expand our advertising and sponsorship opportunities, offer unique programming content, differentiate the ReplayTV Service and enhance the ReplayTV brand," the SEC filing said.

Like a number of start-ups, ReplayTV is also losing money. So far, the company has negligible revenue. It posted a loss of $35.9 million in 1999, according to the SEC filing.

"As of December 31, 1999, we had shipped only about 6,000 ReplayTV-enabled PVRs and had recognized no revenues. We have incurred significant losses to date and expect to incur significant losses and negative cash flow for the foreseeable future," the filing said.