Dish Network Corp. (DISH) and its former unit EchoStar Corp. (STATS) agreed to pay TiVo Inc. (TIVO) $500 million to settle all the ongoing patent litigation over digital video recorder technology.

The settlement was announced Monday along with Dish's first-quarter results, in which the second-largest U.S. satellite-television provider said its first-quarter profit more than doubled from a year earlier as prior-year litigation expenses were supplanted by a $340.7 million credit.

News of the settlement sent TiVo shares soaring 22% to $11.65 in premarket trading. Dish's class A shares rose 9% to $27.28.

"We are pleased to put this litigation behind us and move forward," Dish Chairman and Chief Executive Charlie Ergen said in a press release.

Under the terms of the settlement, DISH and EchoStar will provide an initial payment of $300 million with the remaining $200 million distributed in six annual installments between 2012 and 2017. All companies agreed to dismiss pending litigation and dissolve injunctions.

TiVo has been embroiled in patent litigation for years regarding its DVR technology. TiVo initially sued Dish and EchoStar in 2004 for infringing on patents pertaining to its "Time Warp" DVR technology. Tivo also has filed patent lawsuits against AT&T Inc. (T) and Verizon Communications Inc. (VZ) in recent years and in February was sued by Motorola Mobility Holdings Inc. (MMI) in a matter involving DVRs.

TiVo said Monday that it granted Dish a license under its Time Warp patent and other related patents until they conclude. TiVo also is granting EchoStar a license to design and make some DVR-enabled products solely for Dish and two international customers. Meanwhile, EchoStar granted TiVo a license under certain DVR-related patents, the companies said.

For Dish, the suit ends years of litigation and should enable the company to narrow its focus on adding subscribers. Dish recently shifted its strategy, attempting to attract more affluent customers who are willing to spend more each month on video and less likely to cancel their service, emulating rival DirecTV Group Inc. (DTV). Earlier, Dish targeted lower-end customers, many of whom were hit hard by the economic downturn.

The strategy is yielding early benefits. The company gained a net 58,000 subscribers during the first quarter, snapping a streak of quarterly subscriber losses that had started in 2010's second quarter. It ended the latest period with 14.2 million customers.

Dish also said Michael Kelly, executive vice president for commercial and business services, was named president of Blockbuster. Dish won last month's bankruptcy court auction for the video rental business' assets with a bid it said was valued at about $320 million. Earlier, it agreed to buy DBSD North America Inc. out of bankruptcy for about $1 billion.

Dish reported a first-quarter profit of $549 million, or $1.22 a share, up from $231 million, or 52 cents a share, a year earlier. Revenue rose 5.5% to $3.22 billion.

Costs plunged 14% amid the litigation impacts.

Analysts polled by Thomson Reuters had forecast a profit of 68 cents a share on $3.23 billion in revenue.

Meanwhile, EchoStar--the maker of set-top boxes that was spun off from Dish at the beginning of 2008--posted a profit of $17 million, or 19 cents a share, down from $72 million, or 84 cents a share, a year earlier. Revenue fell 23% to $480 million.

EchoStar shares closed Friday at $37.08 and was inactive in recent premarket trading.

-By Steven Russolillo, Dow Jones Newswires; 212-416-2180; steven.russolillo@dowjones.com

--Matt Jarzemsky contributed to this report.
Marcus and Millichap (NYSE:MMI)
Historical Stock Chart
From Jun 2024 to Jul 2024 Click Here for more Marcus and Millichap Charts.
Marcus and Millichap (NYSE:MMI)
Historical Stock Chart
From Jul 2023 to Jul 2024 Click Here for more Marcus and Millichap Charts.