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ROVI CORPORATION

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LOGO

On May 5, 2015, Rovi Corporation (the “Company”) posted a slide presentation entitled “Perspective on the ISS & Glass Lewis Recommendations” on the Company’s website (the “Consolidated Recommendation Response”). A copy of the Consolidated Recommendation Response is filed herewith as Exhibit 1.

 

 

Exhibit 1

Consolidated Recommendation Response

Perspective on the ISS & Glass Lewis Recommendations
Rovi’s Board of Directors respectfully disagrees with the recommendation made by Institutional Shareholder
Services (ISS) and Glass Lewis & Co. (GL) in connection with Rovi’s 2015 Annual Meeting of Stockholders, to
be held on May 13, 2015
We
believe
the
analysis
used
is
flawed,
in
large
part
because
we
do
not
believe
it
is
appropriate
to
evaluate a
company
like
Rovi
–
which
has
undergone
broad
repositioning
over
the
past
several
years
–
as
if
it
has
been
operating under ordinary circumstances
ISS
and
Glass
Lewis
are
generalists
by
nature
–
we
believe
their
analysis
displays
a
serious
lack
of
understanding of the highly complex nature of our business, the rapidly-evolving secular changes and
challenges affecting our end markets, as well as our accomplishments through the transformation as a result
Rovi
stockholders
need
to
review
the
facts
carefully
because
our
investors
face
a
fundamental
decision
with respect to the Company's strategic direction and the qualifications of our Board of Directors to lead the
Company.
That
decision
requires
greater
attention
to
detail
than
ISS
and
Glass
Lewis
have
provided
Fundamentally, recommending new directors without any idea of what direction they will take
the company is risky and irresponsible
Rovi’s additional responses to some of the specific findings made by ISS and Glass Lewis are included in this
presentation
0

1
Lack of Strategic Plan
ISS / Glass Lewis view
Rovi view
A dissident slate not seeking
majority control does not need
a plan (ISS)
Engaged’s plan recommends a
strategic review and improved
corporate governance and
executive compensation
standards (GL)
This is a dangerous and naive view that does not accurately reflect the true
dynamics of a Board room that we strongly disagree with
Adding new directors with no plan while Rovi is in the midst of executing upon a
strategic plan to deliver strong shareholder growth would be very disruptive during a
crucial period of execution for the Company
Engaged Capital has not offered a plan for Rovi
Engaged Capital has had access to Rovi’s management team for nearly two years –
more than enough time to formulate at least a few ideas or a basic strategic
vision
for
the
Company.
Yet
Engaged
Capital
has
not
articulated
a
vision
or
any
meaningful steps other than generic corporate finance strategies
Engaged Capital has not offered any ideas for how to drive growth, either through
licensing, product delivery or otherwise, nor have they stated what costs they would
be able to remove from the business

Quality of Nominees
ISS / Glass Lewis view
Rovi view
Rovi’s Board could benefit from
having “stockholder friendly
nominees”
We agree that there is value in a slate of stockholder friendly nominees. However,
we strongly believe that any slate of candidates should be compromised of
stockholder friendly QUALIFIED nominees. As part of our search process with the
assistance of a leading executive search firm, we are committed to adding a
stockholder friendly QUALIFIED nominee to augment our Board
We have taken nearly a half dozen highly qualified board candidates suggested by
existing stockholders and added them to our search process
We believe potential new directors should add value, as opposed to simply not
doing
harm.
Rovi
is
a
complex
business
at
a
critical
time
in
its
history,
and
the
addition of an unqualified director would in fact be harmful
We believe Engaged Capital’s nominees are NOT qualified to serve our
stockholders
Glenn
Welling
is
a
hedge
fund
manager
with
no
known
intellectual
property
(IP)
experience
or
demonstrated
operational
ability,
much
less
in
the
technology
field
David Lockwood’s qualifications are inferior and unneeded, as ISS and Glass
Lewis have agreed
Raghavendra Rau and Engaged Capital’s other nominees have clear records of value
destruction at other public companies, as you can see at
http://www.rovicorp.com/content/dam/rovicorp-
ancillary/dm3/corp/proxy_apr15/050415b.pdf
2

3
ISS / Glass Lewis view
Rovi view
Rovi is perpetually in a
“transition period”
and growth
products have not
demonstrated results
Arguments about Rovi’s purported lack of return on investment, including
assertions that we continue to ask for more time without giving investors a good
reason to provide that time, ignore the empirical reality that we are delivering
new revenue today with a clear path to significant growth acceleration.
ISS
and
Glass
Lewis
ignore
the
specific¸
customer-validated
traction
we
are
seeing,
both
in
new
product
uptake
and
our
increasing
ability
to
deliver
multiple
classes
of
product under a comprehensive platform (e.g., Charter, DISH). ISS and Glass Lewis
ignore these points because they undercut their conclusion
We have pointed to numerous, proven examples of our traction in core product areas
and
licensing
–
all
of
which
Engaged
Capital
has
ignored
as
if
they
simply
did
not
exist.  Just some of these examples include our successes with Charter, Dish, Time
Warner Cable, and America Movil
We are perplexed by the observation that “it is possible to invest oneself into
bankruptcy
if
the
answer
is
always
‘the
cycle
is
going
to
take
longer’.”
This
concern
does not apply to Rovi
With EBITDA margins of 40+%, there is no relevant discussion in this situation
about “investing oneself into bankruptcy”
In this public contest, there has been a lot of noise from Engaged Capital about
our purported lack of return on investment in the form of revenue, including
repeated assertions that we continue to ask for more time without giving our
investors a good reason to provide that time
These
arguments
–
and
almost
all
of
those
that
address
our
levels
of
spend
in
the
context
of
our
growth
–
conveniently
ignore
the
empirical
reality
that
we
are
delivering
new
revenue
today
with
a
clear
path
to
significant
growth
acceleration
Capital Allocation

4
ISS / Glass Lewis view
Rovi view
Capital Allocation (continued)
To
the
extent
that
“change”
in
Rovi’s
strategy
is
appropriate,
Rovi’s
Board
and
management have discussed Engaged Capital’s ideas with Engaged,
thoughtfully considered them along with suggestions from other stockholders,
and
taken
action
with
respect
to
the
changes
that
we
believe
are
in
Rovi’s
best
interest
We would never seek to shut-out credible opinions about how we can improve our
trajectory; however, we will continue to strongly resist any transfer of power from
those who understand our markets and customers to those who simply do not
We welcome feedback from all of our stockholders, and have participated in what we
believe has been constructive dialogue with Engaged from the onset. In fact, we’ve
made
changes
to
capital
allocation,
share
buybacks
and
executive
compensation
following suggestions from our stockholders
Rovi has been unreceptive to
stockholder suggestions on
capital allocation strategy

5
Capital Allocation (continued)
Source:
FactSet.
1
High based on closing price as of 01/18/2011.
Rovi's product investments
have not yielded the desired
return for stockholders
Some of the failed projects may
be
legacy
issues
from
the
prior
management
team
–
but
they
are the legacy of this same
board
ISS / Glass Lewis draws conclusions about Rovi’s performance based on
calendar year time periods that disregard the substantial changes Rovi made to
its capital allocation strategies following the Sonic acquisition.  The fact is that
Rovi coming out of 2014 was a completely different company than the Rovi that
entered 2010, 2011 or 2012
The
“failed
projects“
ISS
and
Glass
Lewis
cite
primarily
relate
to
the
single
Sonic
acquisition failure. Rovi’s Board has acknowledged that Sonic was a mistake and
the Board has dramatically changed the company’s strategy, structure and product
approach as a result
If it is appropriate to evaluate our Board on the basis of the Sonic period, equal
weight must be given to the latter period reflecting the Board’s revised strategy our
Board has implemented
It is common knowledge that acquisitions are difficult and very challenging.  Holding
a Board of Directors to a zero defect policy, and recommending their replacement
based on a single failed transaction, is insanity based on a complete void of
understanding of the real-world risks in acquisitions and the challenges inherent in
them.
The
Rovi
Board
members
that
Engaged
Capital
seeks
to
replace
(and
that
ISS and Glass Lewis have effectively recommended for the replacement of) are the
same directors that saw the merits of combining Macrovision Corporation and
Gemstar TV-Guide International in 2007. Rovi’s stock moved from a low of $16.65 at
deal
close
to
a
high
of
$68.85
following
that
transaction¹
ISS / Glass Lewis view
Rovi view

6
Operating Performance
Rovi’s overall revenue and core
revenue growth has lagged
despite substantial investment
Criticizing Rovi’s recent revenue growth disregards key aspects of our business
Our product business is an increasingly important part of our connected platform
Engaged Capital’s failure to understand our product cycle’s should be concerning to
stockholders as it demonstrates a lack of understanding of the industry in which we
operate. ISS and Glass Lewis should also be held to a higher standard of that
understanding in their “analysis”
ISS / Glass Lewis view
Rovi view
As
many
of
our
stockholders
and
Wall
Street
Analysts
understand,
we
expect
our
Big
4
license renewals to be a significant driver of revenue growth, and they are all tied to
renewal dates later this year and next
Product cycles in our industry are 18-24 months, and even longer when considering
deployment to scale timelines.
–
As a result, it is patently unreasonable to rely upon the simplistic view that 
“despite the company’s heavy investments, the product segment has not seen
the kind of ramp-up that shareholders may have expected”
Both the absolute revenue and share of revenue from our product business has been
increasing, and its strong profitability provides incremental margin to our IP business
Our product revenues are an increasingly important piece of our business; with
product revenues increasing to 51% of revenues in Q1’15 from 45% in 2013. This is
clear evidence of our past investments in both IP and products producing results
despite the decline in our analog business revenues from $129 million in 2010 to
$30 million in 2014. Our product investment has supported core revenue that is up
~$100 million since 2010, to offset the decline from our analog business
The significant synergies that exist between our product and licensing businesses
that we have highlighted before, as well as the continued validation from marquee
customers who utilize both our products and IP, we believe, contradicts ISS and
Glass Lewis' assertion of a "failed" product investment strategy

7
Operating Performance (continued)
Rovi’s high margins are due to
its IP business
Rather, Rovi’s margin outperformance was driven by:
Rovi’s
superior
margin
profile
cannot
be
“explained
away”
by
virtue
of
our
IP
business
ISS / Glass Lewis view
Rovi view
Rovi’s margins are high even compared to pure IP companies, or companies for
whom a vast majority of revenue is comprised by IP
Some
of
the
benchmarking
peers
included
pure
IP
companies,
which
have
an
average
CY2014 EBITDA margin of 40%, lower than Rovi’s 43% margin
Importantly, Rovi’s margin performance has exceeded that of these peers despite
both (i) our transformation and the reinvestment it has required, and (ii) the
existence of our large and growing product business
Synergies among our various businesses that allow us to achieve revenue across
various Rovi properties with the same dollar of spend
Continued reduction in our cost base, including rationalization of non-strategic
assets, aligning our resources more carefully against our opportunities, and
revised executive compensation practices

8
Operating Performance (continued)
The company underperformed
selected peers and the S&P 500
in ROA, ROE, revenue growth,
and earnings per share growth
measures
Rovi has experienced a high
degree of volatility in its
earnings
The
ISS
/
Glass
Lewis
analysis
disregards
our
stated
strategy
of
reinvestment
for
growth and results in a misleading view of Rovi’s performance
Since
2012,
and
despite
the
comprehensive
rebuilding
of
the
business,
our
cumulative net loss before extraordinary items was only $12.3 million or 0.8% of
cumulative revenue over the same period
In
2014
our
Non-GAAP
profit
margin
was
30%,
far
above
those
of
IP
and
DaaS
peers
of 19% and 2015 proxy peers of 9%
Our net income
(excluding
extraordinary
items)
has
NOT
displayed
“remarkable
volatility”
ISS / Glass Lewis view
Rovi view
Rovi’s net income margin, on a non-GAAP basis, changed from 30% in 2012 to 31%
in 2013 and 30% in 2014, all while the Company was investing in strategic growth
areas.  These movements are NOT “remarkable volatility”
Companies like Rovi that serve highly fluid end-markets are less likely to exhibit
highly consistent net income from one year to the next than companies in less
dynamic sectors with established, long-term margin expansion structures and
more end-market stability may be expected to have
Companies
that
have
recently
undergone
(or
that
are
in
the
midst
of)
a
transformation
on the scale of Rovi’s are, we believe, very unlikely to demonstrate linear net income
performance. Transformations are focused on repositioning for the longer-term rather
than managing to immediate-term net income results
We have spent the last several years investing in strategic growth areas and
preparing for our Big 4 licensing renewals which have required considerable effort
We
expect
the
Big
4
renewals
to
contribute
significantly
–
and
positively
–
to
all
of these metrics
As
a
result
of
our
investments,
we
have
a
clear
line
of
sight
to
achieving
sustainable,
profitable
growth
provided
that
our
strategy
is
not
derailed
by
outsiders
who
have
not owned our shares until recently
We believe it is inappropriate to focus on year-on-year EPS growth due to the
outsized
and
misleading
impact
of
“small
numbers”
on
that
calculation

9
The
“Big
4”
Renewals
ISS / Glass Lewis view
Rovi view
Investors
were
“surprised”
at
the success of the contract
renewal with Charter and this
signifies that investors are not
confident
in
Rovi’s
ability
to
renew the other “big”
contracts
(ISS)
We were perplexed that ISS would attribute our stock gain following the Charter
announcement
to
“surprise”
and
believe
this
betrays
a
lack
of
understanding
regarding our business
Rovi stock regularly moves upon perceived indicators with respect to our IP licensing
business, and it was no surprise to us that investors would recognize the significance
of
an
agreement
with
a
sophisticated
service
provider
validating
the
value
of
our
IP
and products.
Simply,
we
view
the
8.6%
increase
in
our
stock
price
on
April
20
to
be
clear
evidence
that
our
stockholders
have
material
upside
potential
before
them
if
we
continue
to
execute
This
position
is
nonsensical.
The
ISS
“logic”
would
have
you
believe
that
any
stock
price increase on good news signifies lack of investor confidence in the future prior to
the increase, because the stock price prior to the increase is “depressed”.   As
opposed to investors seeing positive proof points of strategy and an increased
valuation
of
the
Company
associated
with
those
proof
points.
We
believe
this
is
another example of ISS and Glass Lewis reaching a conclusion before writing
their report, and then manufacturing reasons to support their conclusion. 
DON’T VOTE BASED ON THESE FLAWED CONCLUSIONS

10
Corporate Governance
Rovi adjusted its executive
compensation structure only
after facing proxy contests from
dissidents
Rovi view
Our historical executive compensation plan was designed to attract and retain
talent
during
a
critical
time
in
our
business’
transformation.
We
sought
our
stockholders’
input and made fundamental changes to our plan before Engaged
Capital’s campaign
Overall Rovi has a shareholder friendly governance profile with low risk scores on
Board and Shareholder Rights under ISS’s Governance QuickScore
Our 2012 and 2013 compensation plans were designed to attract and retain talent
during a period of transition for the Company, and thus our performance based
awards lacked a long-term element
During
2013
and
2014
and
before
Engaged
Capital’s
campaign,
we
sought
input
from our stockholders, including Engaged Capital, and made significant changes to
our executive compensation plan. Now with our strategy set, we have introduced real
long-term elements to our compensation plan. ln its report last year dated April 11,
2014, ISS noted: “The company demonstrated responsiveness by engaging with
shareholders and making a number of changes to its compensation programs.”
Rovi proactively changed its peer group well before Engaged Capital launched this
proxy fight. 
Notably,
ISS
and
Glass
Lewis
both
support
our
current
say
on
pay
proposal,
citing
the
positive
changes
Rovi
has
made
in
addressing
concerns
of
stockholders
and proxy advisors in recent years, with ISS noting “The company made a number of
improvements to its pay program, including improving disclosure of performance-
target setting, eliminating discretionary bonuses, making positive modifications to
future performance awards, removing several outsized peers from its peer group and
discontinuing benchmarking elements of pay above the market median. These
actions mitigate several concerns raised by both the dissident and other
shareholders.”
ISS / Glass Lewis view

11
Total Stockholder Return (TSR)
Rovi has underperformed its
selected peers and indexes for
1-, 3-
and 5-year periods and
since the Sonic acquisition
through March 11, 2015
Note:
Market data as of 3/11/2015, consistent with ISS and GL analysis.
These time periods present a distorted view in this case.  Investors should assess
Rovi’s performance following the implementation of the Company’s strategy shift
The calendar period do not account for the dramatic and decisive changes Rovi’s 
Board and leadership have implemented
Since
these
changes
were
implemented
beginning
in
July
2012,
our
stock
price
and
trading multiple have improved markedly and well in excess of the indices and peer
groups used by ISS and Glass Lewis. Specifically, Rovi’s Total Shareholder Return
(TSR) has outperformed peers and indices referenced by ISS and Glass Lewis by
an average of 68%, while Rovi’s earnings multiple has expanded by nearly 200%
more than that of the 2015 proxy peers as well as the IP and DaaS peers. ISS and
Glass Lewis ignore those points because they undercut their conclusion
Wall
Street
analyst
price
targets,
based
upon
our
articulated
strategy
before
Engaged
Capital
began
its
campaign,
validate
a
belief
in
further
stock
price
appreciation
Peer group and market indices comparisons do not tell the whole story here
Rovi’s peer groups include a broad variety of companies that face dramatically
different circumstances from one another and from Rovi
The broad market averages relied on by ISS and Glass Lewis may be valuable in
assessing large sets of data and industries, but they ignore unique characteristics of
individual companies and can be particularly misleading for assessing the
performance of a company like Rovi that has undergone significant changes in a
relatively short time period
These factors are especially true in the technology sector, an industry in which
companies and public markets change rapidly and unpredictably, and companies’
financial profiles vary widely
Rovi’s Board has taken responsibility for the Sonic acquisition and readily
acknowledges that the acquisition of Sonic Solutions was not a good deal for
Rovi
and
the
Board
has
subsequently
rebuilt
Rovi
from
the
ground
up
ISS / Glass Lewis view
Rovi view
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