Google plans to sell the TV set-top box business of its Motorola Mobility subsidiary to Arris Group, a broadband device vendor, for $2.35 billion.
Arris will acquire patents belonging to the business, called Motorola Home, and will get a perpetual license to other Motorola Mobility patents as part of the deal. The companies announced their agreement late on Wednesday and expect the sale to close by the second quarter of next year.
Google acquired Motorola Mobility in a closely examined deal that concluded in May. It bought the business primarily for its mobile assets and proceeded to seek a buyer for its Motorola Home division, which primarily makes set-top boxes for bringing video and other broadband services to TVs. Motorola Home had revenue of $3.4 billion in the year ending Sept. 30.
Despite the growth of Internet-based video services, Arris sees growth ahead in the set-top box business. The combined companies will have more than 500 customers in 70 countries, according to a press release.
"Every operator that we've talked to tells me that in-home devices are not going to go away," Arris Chairman and CEO Bob Stanzione said on a conference call to discuss the deal. He sees a new generation of the boxes that will carry both traditional and IP (Internet Protocol) video services going into homes soon.
Arris has no plans for joint development with the remaining parts of Motorola Mobility that are now under Google, but it will have a license to much of that company's mobile patents, Stanzione said. Those, in addition to Motorola Home's long experience working with the mobile part of the company, could help it make mobile devices interact more closely with set-top boxes, Stanzione said.
Google is fighting a patent lawsuit against TiVo that relates to some of the set-top box technology. Google will continue to handle the litigation, and Arris's potential financial liability in the case is capped at a low level, Stanzione said. "Google has taken that risk off the table for Arris," he said. The deal would not protect Arris from an injunction banning the sale of its products, but the chance of an injunction is remote, he said.
The sale of the unit will not have any effect on its content-security joint venture with Comcast, Stanzione said. Arris will also continue doing software development under a partnership with NDS where its customers want that technology, he said.
As part of the deal, Google will receive about $300 million of newly issued shares in Arris, giving it about 15.7 percent ownership in the company.