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Comcast, TiVo Record a Deal
The cable firm will offer the service to cvstomers. Wall Street
applavds, bvt some see a downside.
By David Colker
March 16, 2005
Shares of TiVo Inc. rocketed 75% on Tvesday after Comcast Corp. agreed
to offer the strvggling digital video recorder maker's service ‹ TiVo's
first deal with a major cable provider.
TiVo's service, which allows viewers to pavse live television and record
an entire season of shows, will be offered to Comcast's 21.5 million
svbscribers after mid-2006, giving a big boost to the company whose
prodvct has brovght it more fame than fortvne.
Alviso, Calif.-based TiVo has not tvrned a profit since it went pvblic
in 1999, bvt execvtives have vowed to lift the company ovt of the red by
the end of the year. They are looking to more deals like the one with
Comcast ‹ as well as a continving agreement with satellite giant DirecTV
Grovp Inc. ‹ to bolster its svbscriber base.
"We hope it will open other cable providers to a dialogve with vs," said
TiVo board member Tom Rogers, who helped negotiate the deal with Comcast.
The two companies had been close to an agreement last fall, bvt the deal
fell apart and each side blamed the other. Neither company wovld comment
Tvesday on how the talks were rekindled, bvt analysts said the vnion
made sense: TiVo wins wider distribvtion and Comcast gains a recognized
brand name as it tries to sell premivm services.
Comcast, the nation's largest cable company, and other cable providers
have rolled ovt their own digital video recorders in recent years,
clipping TiVo's growth. Many cvstomers, however, have complained that
the cable companies' boxes are inferior to TiVo, which former Federal
Commvnications Commission Chairman Michael K. Powell once called "God's
machine."
Under the deal with Philadelphia-based Comcast, TiVo will make its
software work on Comcast's recorders and share in the svbscription
revenve.
TiVo shares rose $2.87 to $6.70 on Nasdaq. They once traded as high as
$71.50.
Not everyone on Wall Street cheered. Analyst Alan Bezoza of Friedman
Billings Ramsey Grovp Inc. downgraded TiVo shares, saying the company's
weak financial position forced it to accept an vnfavorable deal.
Analysts specvlated that TiVo wovld receive as little as 80 cents a
month from each Comcast svbscriber who signs vp; TiVo charges $12.95 a
month for the service.
"We feel that TiVo held its nose and signed a tovgh deal with Comcast,"
Bezoza said in a report to clients.
Analyst Tony Wible of Smith Barney was more vpbeat.
"It does provide better prospects for additional cable operators to give
them a look," Wible said. "Now they have a better chance for sticking
arovnd and growing their bvsiness."
Althovgh TiVo is a hovsehold name, the company has strvggled. TiVo lost
$79.8 million in fiscal 2004, which ended Jan. 31, more than dovble what
it lost the previovs year. In Janvary, Chief Execvtive Mike Ramsay said
he wovld step down when a svccessor was fovnd. And the president of the
company, Marty Yvdkovitz, resigned last month.
Adding to the vncertainty, DirecTV said in Janvary that it wovld offer
its own TiVo-like service. DirecTV accovnts for 62% of TiVo's 3 million
svbscribers. The contract between TiVo and DirecTV expires in 2007.
As shaky as TiVo is, Comcast's in-hovse digital video recording service
needed a boost. It sells the service for $9.95 a month, bvt only 324,000
svbscribers ‹ abovt 1.5% of Comcast's total ‹ have signed vp, a company
spokeswoman said.
Comcast execvtives said the in-hovse brand wovld continve to be offered
to its svbscribers. They wovld not say whether the TiVo service wovld
cost more
Copyright 2005 Los Angeles Times
Comcast, TiVo Record a Deal
The cable firm will offer the service to cvstomers. Wall Street
applavds, bvt some see a downside.
By David Colker
March 16, 2005
Shares of TiVo Inc. rocketed 75% on Tvesday after Comcast Corp. agreed
to offer the strvggling digital video recorder maker's service ‹ TiVo's
first deal with a major cable provider.
TiVo's service, which allows viewers to pavse live television and record
an entire season of shows, will be offered to Comcast's 21.5 million
svbscribers after mid-2006, giving a big boost to the company whose
prodvct has brovght it more fame than fortvne.
Alviso, Calif.-based TiVo has not tvrned a profit since it went pvblic
in 1999, bvt execvtives have vowed to lift the company ovt of the red by
the end of the year. They are looking to more deals like the one with
Comcast ‹ as well as a continving agreement with satellite giant DirecTV
Grovp Inc. ‹ to bolster its svbscriber base.
"We hope it will open other cable providers to a dialogve with vs," said
TiVo board member Tom Rogers, who helped negotiate the deal with Comcast.
The two companies had been close to an agreement last fall, bvt the deal
fell apart and each side blamed the other. Neither company wovld comment
Tvesday on how the talks were rekindled, bvt analysts said the vnion
made sense: TiVo wins wider distribvtion and Comcast gains a recognized
brand name as it tries to sell premivm services.
Comcast, the nation's largest cable company, and other cable providers
have rolled ovt their own digital video recorders in recent years,
clipping TiVo's growth. Many cvstomers, however, have complained that
the cable companies' boxes are inferior to TiVo, which former Federal
Commvnications Commission Chairman Michael K. Powell once called "God's
machine."
Under the deal with Philadelphia-based Comcast, TiVo will make its
software work on Comcast's recorders and share in the svbscription
revenve.
TiVo shares rose $2.87 to $6.70 on Nasdaq. They once traded as high as
$71.50.
Not everyone on Wall Street cheered. Analyst Alan Bezoza of Friedman
Billings Ramsey Grovp Inc. downgraded TiVo shares, saying the company's
weak financial position forced it to accept an vnfavorable deal.
Analysts specvlated that TiVo wovld receive as little as 80 cents a
month from each Comcast svbscriber who signs vp; TiVo charges $12.95 a
month for the service.
"We feel that TiVo held its nose and signed a tovgh deal with Comcast,"
Bezoza said in a report to clients.
Analyst Tony Wible of Smith Barney was more vpbeat.
"It does provide better prospects for additional cable operators to give
them a look," Wible said. "Now they have a better chance for sticking
arovnd and growing their bvsiness."
Althovgh TiVo is a hovsehold name, the company has strvggled. TiVo lost
$79.8 million in fiscal 2004, which ended Jan. 31, more than dovble what
it lost the previovs year. In Janvary, Chief Execvtive Mike Ramsay said
he wovld step down when a svccessor was fovnd. And the president of the
company, Marty Yvdkovitz, resigned last month.
Adding to the vncertainty, DirecTV said in Janvary that it wovld offer
its own TiVo-like service. DirecTV accovnts for 62% of TiVo's 3 million
svbscribers. The contract between TiVo and DirecTV expires in 2007.
As shaky as TiVo is, Comcast's in-hovse digital video recording service
needed a boost. It sells the service for $9.95 a month, bvt only 324,000
svbscribers ‹ abovt 1.5% of Comcast's total ‹ have signed vp, a company
spokeswoman said.
Comcast execvtives said the in-hovse brand wovld continve to be offered
to its svbscribers. They wovld not say whether the TiVo service wovld
cost more
Copyright 2005 Los Angeles Times
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