TiVo Shares Advance Following DirecTV Deal

Apr 12, 2006  •  Post A Comment

Digital video recorder maker TiVo’s shares shot up more than 6 percent Wednesday morning after the company said it reached an agreement with satellite operator DirecTV Group that extends their relationship for another three years.

The news is widely considered positive for TiVo, whose future became cloudy after DirecTV indicated last August that it would no longer market TiVo’s DVRs, opting instead to favor rival DVR maker NDS Group, controlled by Rupert Murdoch’s News Corp., which also owns a controlling 34 percent stake in DirecTV.

DirecTV still will not market the TiVo product. Instead, the companies have agreed to continue servicing the 2 million DirecTV subscribers who currently have a TiVo box. TiVo will supply maintenance and support to these customers.

TiVo shares advanced 47 cents to $7.98 a share on trading volume that was much greater than the three-month average. Financial terms of the deal were not disclosed.

TiVo has been moving aggressively to rely less on its DirecTV relationship. In recent months the company has changed its strategy, favoring direct sales of its DVRs to customers. In addition, TiVo struck a partnership with cable giant Comcast a year ago to jointly develop a DVR service for Comcast subscribers.

As part of the new deal, TiVo and DirecTV agreed not to engage in any patent fights with each other. TiVo is currently embroiled in a legal battle with rival satellite operator EchoStar Communications over accusations that EchoStar stole TiVo technology for use in its own DVR.