Thomson joins in on ContentGuard takeover

Consumer electronics company Thomson has joined Microsoft and Time Warner in trying to take control of US digital rights...

Consumer electronics company Thomson has joined Microsoft and Time Warner in trying to take control of US digital rights management company ContentGuard Holdings.

Thomson's agreement to buy a 33% voting stake in the company comes less than two weeks after the EU issued a formal set of objections to Microsoft and Time Warner's proposal to take over ContentGuard, citing monopoly concerns. Thomson's presence would dilute the control of the other companies, perhaps easing the deal toward completion.

According to Time Warner senior vice-president Ron Grant, the new agreement is not aimed at appeasing the EU. Although the companies hope the new deal will be approved, Grant said the point of the revision was to open up more opportunities to accelerate the development of digital rights management.

The EU has said it fears that Microsoft's strength as a software provider, combined with Time Warner's broad media holdings, could give the pair the incentive and ability to use their assets to put digital rights management rivals at a disadvantage.

The entry of French company Thomson could dissolve these concerns, and also brings another strong player to the table. Thomson provides digital content services, such as DVD replication and cinema post-production, and has expertise in intellectual property licensing.

Digital rights management technologies are used to protect digital content, such as movies and music, from unauthorised use.  As more content becomes available in digital form, the digital rights management market has ballooned, enticing industry players to get in on the act.

Thomson vice-president Joe Berchtold said that Thomson hoped to drive a whole new host of business services for content owners. While plans for the services were still nascent and separate from the deal, Berchtold did not rule out future cooperation with Microsoft and Time Warner given their strengths in the market.

The agreement is also aimed at driving interoperable standards. 

"We would like to see consumers have a choice of platforms to secure their content," said Microsoft general manager Brad Brunell.

Microsoft and Time Warner have purchased most of the stake held by ContentGuard's original technology provider Xerox. The value of their investments has not been disclosed.

Time Warner's Grant said that the companies respected the EU's process and would cooperate with it.

Scarlet Pruitt writes for IDG News Service

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