DirecTV (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 favour 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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