DVR Doings: TiVo Snags 2nd Major MSO Deal

TiVo shares rose Thurs after Cox agreed to make TiVo’s DVR and interactive advertising service available to select customers. TiVo will customize its software for download on compatible Cox boxes (no box swap required). Comcast provided the building blocks for the Cox deal, striking a similar pact in 2005. Comcast and TiVo have been working on the software for many months, with a rollout still planned for later this year and a broader deployment in ’07. Cox expects to launch its TiVo software in some markets in the 1st half of ’07, with Motorola markets getting the service before S-A systems (makes sense since Moto-dominant Comcast laid the groundwork). For Cox, the TiVo service will command a small premium (probably $3-$5) from DVR subs, who now pay about $10/month for DVR service. Comcast hasn’t revealed how it will offer or price its TiVo product. While TiVo’s stock benefited from the news, Friedman Billings Ramsey wasn’t terribly impressed. "While we recognize the positive aspects of this deal, as it helps ensure the longer-term survival of TiVo’s software, we have difficulty seeing how this agreement results in a meaningful new growth opportunity for the company," the investment firm said in a note to clients. Even if all the major US MSOs incorporated TiVo software as a subscriber option, Friedman estimates it would yield at most $35mln-$40mln per year by ’09 (or 8% CAGR on estimated sales of $240mln for CY07).