[DMCA-Activists] Philips, Sony to Buy InterTrust

[Seth Johnson]

(Forwarded from Pho list)

-------- Original Message --------
Subject: pho: Philips, Sony to Buy InterTrust Tech for $453
Mln
Date: Wed, 13 Nov 2002 10:33:45 -0800
From: Ronald Gertz <address@hidden>
To: "Pho (E-mail)" <address@hidden>

Philips, Sony to Buy InterTrust Tech for $453 Mln 

1 hour, 4 minutes ago 
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) 

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