D&M; Holdings Wins Bid for ReplayTV, Rio

D&M; Holdings of Tokyo won a Bankruptcy Court auction for Sonicblue Inc.’s ReplayTV and Rio business units, giving it two well-known brands in the emerging markets for digital video recorders and portable digital music players.

D&M;, a consumer-electronics company that manufactures products under the Denon and Marantz brands, announced Wednesday that it will pay $18 million for ReplayTV and $18.2 million for Rio, as well as assume undisclosed liabilities. D&M;’s Digital Networks North America Inc. subsidiary outbid one other company, a technology start-up led by the founder of ReplayTV, which offered $17.2 million for that unit.

Representatives of Hollywood studios also attended Tuesday’s auction to remind bidders of the copyright infringement lawsuit pending against Sonicblue. The lawsuit was suspended when Sonicblue filed for bankruptcy protection, but the entertainment companies may bring a new claim if D&M; continues selling recorders that can skip commercials automatically and send recorded programs through the Internet.

Michael Seedman, chairman of Digital Networks North America, said the company will support the recorders already sold. But he added, “We are looking at ways to work closely with Hollywood to make sure our products are friendly to them, and so we haven’t decided at this time what we’re going to do with any of the specific features.”

The company expects to close the purchase within 10 days.

Staggering under the debt it accumulated in a series of acquisitions, Sonicblue filed for protection March 21 under Chapter 11 of federal bankruptcy law. Although that procedure is typically used by companies to reorganize and stay in business, Sonicblue plans to sell all its assets and cease operations.

The Rio and ReplayTV units generated about $84 million in sales in the last 12 months, but both were consistently unprofitable, Sonicblue Chief Executive Greg Ballard said.

Both were pioneering developers of digital devices that have yet to catch on with the mass market.