Audio Video News

A former graphics-chip manufacturer has been in a feeding frenzy lately, buying a stalled personal video recorder company and a relatively unknown specialty electronics maker. Sonicblue, Inc. has acquired ReplayTV, Inc. and Sensory Science, maker of dual-deck VCRs and combination DVD player/VCR units, and the distributor of Loewe television sets, a German-made high-end brand.

The two acquisitions were made via stock transactions with a combined value of approximately $128 million, of which $8 million went to Sensory Science. The acquisitions will boost Sonicblue's presence in the digital video product market, according to its chief technology officer, Andrew Wolfe. Santa Clara, California–based Sonicblue, originally known as S3, Inc., has been re-creating itself, starting with the 1999 purchase of Diamond Multimedia Systems, Inc., maker of a controversial but commercially successful portable MP3 player called the Rio. In 2000, Sonicblue reported a net income of $312.8 million on revenue of $536.7 million.

The takeover by Sonicblue means a sea change for ReplayTV, one of only two makers of a hard-disk–based television recording device called a personal video recorder (PVR). ReplayTV was the subject of copyright infringement lawsuits early in its life, overcoming those only to face the daunting truth that the scant 40,000 television service subscriptions it had suceeded in selling were not nearly enough to sustain a viable business.

ReplayTV recently announced that it was withdrawing from the PVR business to concentrate on licensing its technology to other companies. Sonicblue sees other possibilities in the technology, including its use as a music recording device or as a sort of multimedia server for home entertainment networks, Wolfe said.

ReplayTV also briefly toyed with producing its own content, a project that never really got off the ground but that nonetheless burned through as much as $10 million per month, according to a lawsuit filed Wednesday, January 28 in Los Angeles Superior Court by Kate Moulene. The former vice president of the content development and production division claims that ReplayTV set up the division as a "sham operation" to make itself look attractive to buyers. Moulene charges that she was misled into accepting the job and was then discriminated against by being denied a severance package that was offered to her male colleagues. Her short tenure ended last November when ReplayTV bailed out of the content business at the same time it decided to get out of the consumer electronics business. Moulene claims ReplayTV had "no commitment" to the content division or its workers. She charges that her stock option contract was altered after she began the job and that she was "defamed and slandered" by ReplayTV executives after she left. Her attorney, James F. Elliot, is seeking punitive and compensatory damages, as well as restitution.