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Liberty gives interactive TV a Wink

The investment firm agrees to buy Wink Communications for $100 million in cash, putting it in a position to create a dominant force in interactive TV services.

Liberty Broadband Interactive Television said Monday that it has agreed to buy software maker Wink Communications for about $100 million in cash, further expanding its holdings in the interactive TV market.

Under financial terms of the agreement, Tulsa, Okla.-based Liberty will pay $3 for each outstanding share of Wink. The Alameda, Calif.-based company, which develops software to imbed interactivity into TV programming and advertisements in homes with enhanced set-top boxes, will be a wholly owned subsidiary of Liberty Broadband and will be managed by Wink CEO Maggie Wilderotter.

The deal, expected to close during the third quarter, is subject to regulatory and shareholder approval. Wink's board of directors has approved the sale.

The acquisition is the latest by Liberty Broadband parent Liberty Media in the interactive-TV market. In May, Liberty disclosed that it had bought a controlling interest in OpenTV, a maker of interactive-TV software, for $185 million in cash and stock. Also in May, the company agreed to buy the remaining stake in ACTV, which makes software for interactive advertising. Liberty also holds stakes in a variety of cable channels, such as the Discovery Channel and QVC.

Industry analysts say Liberty's cash infusion of Wink comes at a crucial time in the software company's development, as the advertising market remains weak. By keeping costs low and building support from advertisers and TV networks, however, Wink has been able to reach 5 million homes, said Josh Bernoff, an analyst at Forrester Research.

"The problem is that (Wink) needed significantly more capital to succeed," said Bernoff. "It's taken a while to get advertisers interested, especially with the downturn. Success is profitability, and that's dependent on the ability of the advertiser to support them--and it could be two to three years from now."

Meanwhile, Liberty is poised to combine several technologies into one company to create a dominant force in interactive TV services.

The broadband group "is pleased to add Wink to our emerging iTV company," Peter Boylan, CEO of Liberty Broadband, said in a statement. "With more than 5 million interactive-enabled homes served by its network, it is the clear leader in domestic interactive deployments across multiple cable and satellite platforms."