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Send a Message to the Rovi Board – Enough is Enough!

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Engaged Capital, LLC (together with its affiliates, “Engaged Capital” or “we”), an investment firm specializing in small and mid-cap North American equities and beneficial owner of 550,000 shares of the common stock of Rovi Corporation (“Rovi” or the “Company”) (Nasdaq: ROVI), rejected Rovi Board’s baseless and recycled claims and addressed fellow shareholders.

Dear fellow Rovi shareholders:

We are days away from a vote that is critical for the future of our Company. Our choice in electing the right set of directors to oversee Rovi will have tremendous impact on our ability as shareholders of the Company to protect and enhance the value of our investment and set Rovi on track to become a stronger, better-run, and ultimately more valuable company. Do not squander this opportunity to help realize the full value of your investment in Rovi. Vote to replace three over-tenured directors who are directly responsible for the losses we have all suffered with three fresh and experienced candidates who will work constructively with the rest of the Board to protect shareholders’ best interests. Vote the enclosed WHITE proxy card today to elect all three of Engaged Capital’s highly-qualified nominees- David Lockwood, Raghavendra Rau, and Glenn Welling.

At this late stage in this proxy contest, we are disappointed, but not surprised, to see the Rovi Board increasingly resort to questionable tactics like cherry-picking performance data, smearing our nominees’ reputation based on engineered data, attacking ISS and Glass Lewis, and blaming former management for the Board’s strategic failures. These are the familiar hallmarks of a poorly governed board clinging to power – and we categorically reject them. Clearly, the Rovi Board hopes that by continuing to repeat its misleading claims shareholders will be confused about the facts and distracted from the Board’s massive destruction of shareholder value at Rovi.

For example, the Board’s claims of making “good faith” offers to settle with Engaged Capital are simply false. Since the beginning of this contest, the Board has made one and only one offer that has remained unchanged – to add one of our nominees that they have chosen to the Board and to add a jointly-chosen candidate. In the Company’s offer, no incumbent will take responsibility for the value-destruction and step down, no direct shareholder representative would join the Board, Engaged Capital would be restricted to an unprecedented ownership limit of just 1% of the outstanding shares, and no strategy or finance committee would be given the proper mandate to tackle the strategic issues facing the Company. In short, this supposed “good faith” proposal is not nearly close to what the shareholders of Rovi demand in order to have any confidence that Rovi will change for the better. It is appalling to us that the Board insists on couching their intransigence behind repeated references to this one deeply inadequate and completely unreasonable offer from which they have refused to budge. Make no mistake – this is not constructive engagement with shareholders. Engaged Capital has settled every potentially contested engagement we have had with a portfolio company and this is the first time we have had to go through a full proxy contest. The reason is plain – this Board has NOT worked with us in good faith to try to settle the matter.


Chairman Ludwick, James Meyer, and James O’Shaughnessy have been on the Board for 9, 18, and 11 years. They are so unpopular with shareholders that they received only ~74% support last year when running unopposed and lack critical Service Provider, OTT, and IP experience, among others.

Their record of value-“creation” at Rovi is:

  • NEGATIVE returns for Rovi shareholders for the past 1-, 3-, and 5- year periods and since the Macrovision merger with Gemstar in 2007.
  • Over $1.3 billion of shareholders’ capital since 2011 has generated zero revenue growth to date.
  • ~20% decline in EBITDA despite flat revenues.
  • Multiple failed product initiatives despite promises of future growth.
  • Approved the acquisition of Sonic which destroyed ~$680 million of shareholder value.
  • ~50% decline in share price over the past five years and over 150% underperformance relative to peers1.

In contrast, David Lockwood, Raghavendra Rau, and Glenn Welling bring shareholder-focused perspectives, new ideas, and collective expertise in the following areas:

  • Experience in the online video and Over-the-Top (OTT) industries
  • Close relationships with key C-level personnel at large Tier 1 and Tier 2 service providers
  • Experience operating software companies
  • Successful track records building next generation software products accepted by the largest service providers
  • Significant experience with Intellectual Property Management
  • Track record of growing revenue and driving cost efficiencies
  • Significant experience developing strategies that increase shareholder value, including with respect to capital allocation strategies
  • Significant expertise in improving governance structures including developing executive compensation plans that align pay with performance
  • Track records of significant value creation
Thank you for your support,

/s/ Glenn W. Welling

Glenn W. Welling
Engaged Capital, LLC

Vote the WHITE Engaged Capital proxy card TODAY to protect the value of your investment.

If you have any questions, or require assistance with your vote, please contact Morrow & Co., LLC, toll- free at (800) 662-5200, call direct at (203) 658-9400 or email:

Rovi shareholders are invited to visit to review Engaged Capital’s case for change at Rovi, and to review its full presentation, letters, and proxy material prepared for fellow Rovi shareholders.

About Engaged Capital:

Engaged Capital, LLC (“Engaged Capital”) was established in 2012 by a group of professionals with significant experience in activist investing in North America and was seeded by Grosvenor Capital Management, L.P., one of the oldest and largest global alternative investment managers. Engaged Capital is a limited liability company owned by its principals and formed to create long-term shareholder value by bringing an owner’s perspective to the managements and boards of undervalued public companies. Engaged Capital manages both a long-only and long/short North American equity fund. Engaged Capital’s efforts and resources are dedicated to a single investment style, “Constructive Activism” with a focus on delivering superior, long-term, risk-adjusted returns for investors. Engaged Capital is based in Newport Beach, California.

1 Relative to S&P 400 Index

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