DirecTV Throws TiVo A Lifeline

Michael Learmonth | September 3, 2008 11:45 AM

tivo-box.jpgDirecTV (DTV) was once TiVo's (TIVO) most important business partner and greatest source of subscribers. That all ended in 2005 when DirecTV said it would stop marketing TiVo in favor of set-tops made by NDS, a unit of News Corp. (NWS) which then had a controlling stake in the satellite TV company.

But now DirecTV is controlled by Liberty Media (LBTYA), and the company is going back into business with TiVo in a bigger way: the company will market and distribute a TiVo-enabled HD DVR to its 16 million subscribers starting in 2009.

Even better for TiVo: in a SEC filing, the company says "DirecTV will pay a substantially higher montly fee for households using the new high definition DirecTV DVRs with TiVo than fees for previously deployed DirecTV DVRs with TiVo service."

Citigoup analyst Tony Wible said the deal should stop erosion of TiVo's DirecTV subscribers, and protect "the roughly $22 million of high margin revenue TiVo receives from DirecTV today." So, it's not a game-changer for TiVo, but should stem some of the subscriber declines the company suffers every quarter. As of July, TiVo had 3.8 million subscribers, but 2.1 million of those were DirecTV subscribers acquired mostly before 2005.

The new deal runs through February 2015 and TiVo has an option to extend it through February 2018. TiVo shares rose 3% to $8.78 per share in morning trading on the NASDAQ.

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See Also:
TiVo Announces A Meaningless Feature Ahead Of Earnings
Big Win For Cable: Judge OKs TiVo-In-The-Clouds
YouTube Comes To TiVo

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20 Comments

Clyde McPhat said:
Having had the pleasure of using a direct TV TIVO and a non-TIVO DVR from Direct TV, I can't tell you how happy I am that they are back in business with TIVO. Now if Verizon would junk their horrible DVR and get in bed with the guys who invented the DVR, that would be even better news. The FIOS DVR is clumsy.
Bill G (URL) said:
Unlike all the faux good news the TiVo PR department has been shoveling out for the last few years, this is *actual* good news.

Although our definitions may differ, this is a "game changer" from the perspective that prior to this announcement TiVo was consigned to keep losing net subscribers until they eventually either ran out of money (which would take a very long time), or were bought.

With this announcement, I'd bet that they can keep their subscriber base stable pretty much indefinitely.

They'll continue to lose market share, of course, but survival is no longer in doubt.
@Bill: So is TiVo is back where it was in 2005, or do you think some of these advertising and data initiatives will bear fruit?
I Want My HDDTTivo said:
Too late. I've been waiting years for this, and I've run out of time. If the time it took to develop the Comcast Tivo is any indication, we're really talking about June 2010 for this to launch. As much as I hate to say goodbye to my satellite dish, its hello cable for me. Two more years is just too long.
Bill G (URL) said:
Michael,
I think all of those advertising and data selling initiatives amount to just PR, immaterial $ today or in the future.

I wouldn't say they were back to 2005 though.

Late 2004/Early 2005 was when their big subscriber ramp up began, both on DirectTV and TiVo boxes.

Now, their TiVo box growth is completely gone, and they have admitted as much by slashing marketing spending. They'll try and make that up with Comcast like deals, but that's moving so slowly as to be suspect long term.

I think the news today can mean that their DirectTV net subscriber numbers can go from a signficant negative (100-200k per quarter), to at least break even, maybe a small positive.

That's much better than recent history, but not nearly the big days of 2005
Clyde McPhat said:
Michael....to answer your question, the initiatives are NOT impressive at all. Slow is the operative word. Not aggressive at all, and in fact disappointing.


Clyde
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