TiVo, DirecTV to develop new DVR

Wonder if this will result in Tivo gaining rights to use some of RTV's
patents?

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http://news.yahoo.com/s/nm/20080903/tc_nm/tivo_directv_dc_2

By Franklin Paul Wed Sep 3, 10:30 AM ET

NEW YORK (Reuters) - TiVo Inc (TIVO.O) is developing a new digital video
recorder for satellite TV provider DirecTV (DTV.O), rekindling a
strained relationship and potentially opening the door to boosting the
number of its subscribers.

TiVo shares climbed more than 2 percent on Wednesday after the companies
said that they had extended their current deal and added the
development, marketing and distribution of a new high-definition DirecTV
DVR featuring TiVo service. The product's launch is expected in the
second half of 2009.

Terms of the deal, which also includes an extension of intellectual
property arrangements, were not disclosed. But in a federal filing, TiVo
said DirecTV will pay a substantially higher monthly fee for households
using the new high definition DirecTV DVRs than it does for previously
deployed models.

In addition, fees paid by DirecTV are subject to monthly minimums that
escalate during the term of the pact starting in 2010 and those minimum
payments are "substantially higher" than in the prior agreement, TiVo said.

DirecTV was once the biggest source of new subscribers to TiVo's
television recording service. But their relationship soured in 2005 when
DirecTV, the top U.S. satellite TV broadcaster, said it would no longer
market TiVo's set-top boxes and would use its own system made by NDS
Group Plc (NNDS.O).

However, the companies did not sever their ties. In 2006, they extended
their service and support agreement for three years, allowing customers
to continue to receive maintenance and support for their TiVos.

Many of the satellite operator's more than 16 million users still own
TiVo set-top boxes, but their numbers have been dwindling.

At the end of the second quarter, TiVo had a total of 3.6 million
subscribers. Of that 1.7 million were "TiVo-owned" -- users who pay a
monthly fee directly to the company.

TiVo will work with DirecTV to make a DVR product for customers with
high-speed Internet service that will support both companies' latest
features.

"This new deal should minimize the DTV attrition headwind TiVo has felt
as DTV's subs have moved to HD (where there is no TiVo offering today),"
said Citigroup analyst Tony Wible in a note to clients. "Overall, the
new deal should help protect the roughly $22 million of high margin
revenue TiVo receives from DirecTV today."

The new agreement runs through February 2015, with DirecTV having the
right to extend it until February 2018, TiVo said.

DirecTV will continue to develop and offer its own set-top boxes for
both new and existing customers.

Shares of TiVo rose 32 cents to $8.83 in morning trade on the Nasdaq on
Wednesday. DirecTV shares edged up 17 cents to $27.79.

(Reporting by Franklin Paul; Editing by Lisa Von Ahn and Steve Orlofsky)