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AT&T is getting into a bad habit of paying out millions of dollars just to continue operating various parts of its business.
AT&T will pay digital video recording service TiVo a total of $215 million over the next seven years to settle patent disputes, TiVo announced yesterday. TiVo first filed a lawsuit against the telcom giant in 2009 after accusing AT&T of infringing on its DVR patents.
As part of the settlement, AT&T will pay an initial $51 million upfront, and an estimated total of $164 in quarterly payments there after. However, those quarterly payments could grow larger if its number of DVR subscribers exceeds a certain number of subscribers.
In addition to the TiVo settlement fees, AT&T is also paying out a $3 billion breakup fee to T-Mobile parent Deutsche Telekom (one of the highest break-up fees ever) after failing in their bid to acquire the wireless carrier.
As for TiVo, the settlement represents an important source of revenue in spite of the company’s dismal efforts to add new customers to its DVR service. In July, the company made similar deals with Dish Network, which gave TiVo $500 million to settle disputes over patents with Dish’s Echostar service.