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Philips & Sony To Purchase Intertrust DRM Tech
tuxlove writes "Reuters is reporting that Philips and Sony Corp, the parents
of the compact disc, teamed up on Wednesday to buy InterTrust Technologies
for $453 million -- a deal expected to speed up copyright security for
digital media.
The acquisition by Philips Electronics and Sony of the leading U.S.-based
holder of intellectual property in the field of 'digital rights management'
technology is widely seen as a way to prevent Microsoft, which has been
embroiled in a legal battle with InterTrust, from grabbing control of the
potentially lucrative business.
Philips and Sony, the electronics giants who introduced the CD format 20
years ago, said the deal would enable secure distribution of content as more
films and music are sold over the Internet and other media in digital
format."
By Jana Sanchez
AMSTERDAM (Reuters) - Dutch group Philips and Japan's Sony Corp, the parents of the compact disc, teamed up on Wednesday to buy InterTrust Technologies for $453 million -- a deal expected to speed up copyright security for digital media.
The acquisition by Philips Electronics and Sony of the leading U.S.-based holder of intellectual property in the field of 'digital rights management' technology is widely seen as a way to prevent Microsoft, which has been embroiled in a legal battle with InterTrust, from grabbing control of the potentially lucrative business.
Philips and Sony, the electronics giants who introduced the CD format 20 years ago, said the deal would enable secure distribution of content as more films and music are sold over the Internet and other media in digital format.
Philips said the companies would start an open licensing program and would encourage content providers to use the technology, which can protect all digital formats, including CDs, MP3 and DVD.
The two firms said in a statement they would pay about $453 million, or $4.25 per share, for InterTrust Technologies Corp. The price offered is at a 26 percent premium to Tuesday's closing price for the digital rights management firm.
InterTrust shares in New York rallied 25 percent to $4.21 in early trade. Philips shares were little changed in Amsterdam.
Sony, the world's largest electronics group and a major provider of entertainment content, and Philips, Europe's largest maker of consumer electronics, formed a vehicle called Fidelio Corporation to purchase the company.
BOARD MEMBERS TO TENDER SHARES
InterTrust's board of directors unanimously approved the acquisition and board members, holding about 20 percent of outstanding InterTrust shares, agreed to tender their shares.
Some analysts say Microsoft may lose if Philips and Sony are successful at promoting the InterTrust technology throughout the entertainment industry because Microsoft's technology, called "Palladium," would have a tougher time making inroads.
InterTrust filed a patent infringement suit against Microsoft in April 2001. Philips declined to comment on the future of that lawsuit.
All the major music labels, in particular BMG, Sony Music and Universal Music have been investing heavily in copy-proof technologies to protect their artists.
As creators of the CD, the pair have previously locked horns with major music companies over the insertion of errors that prevented consumers from making a copy.
"We come very much from the side of the consumer and we believe the consumer should have the right to reproduce content for their own use," said Philips spokesman Jeremy Cohen.
Analysts said the deal would probably revive the technology of InterTrust, which has struggled to survive due to a very slow uptake of digital sales.
"All of the music the major labels produce is available now for free online, so there has been little call for digital rights management technology for online distribution," said Simon Dyson, analyst at London-based publisher Inform Media Group.
"But the joint involvement of these companies could mean a faster development of copyright protection and that's very good for the music industry," he said.
Dyson points out that Sony in particular, as the world's second-largest major music company, would benefit in terms of sales of the technology and protection of its CD format. (Additional reporting by Christopher Borowski in Amsterdam and Bernhard Warner in London)