TiVo Shares Soar 50% After Landing Multi-Year Deal with Comcast

Strategic Insights -

TiVo's shares saw a substantial increase of 50% on the news of a multi-year deal with Comcast, the largest US cable operator with 21.5 million subscribers. Under the agreement, TiVo will develop a version of its digital video recorder (DVR) service, which will be integrated on Comcast's DVR programs. This partnership aims to enhance the navigation system and introduce advertising capabilities on DVRs, allowing viewers to skip traditional ads. Tom Rogers, TiVo's vice-chairman, highlighted the significance of the deal, emphasizing the potential for advertising opportunities and revenue generation from the Comcast subscriber base.

Key Takeaways:

  • The deal between TiVo and Comcast will make TiVo's service available to 21.5 million Comcast subscribers, marking a significant expansion of its customer base.
  • TiVo will develop a version of its service to be integrated on Comcast's DVR programs, enhancing the navigation system and introducing advertising capabilities.
  • The partnership aims to tap into the advertising opportunities created by DVRs, allowing viewers to skip traditional ads.
  • Tom Rogers, TiVo's vice-chairman, emphasized the potential for revenue generation from the Comcast subscriber base and the importance of capturing advertising revenue in an increasingly DVR-dominated television viewing environment.
  • The financial terms of the deal were not disclosed, but it is assumed that Comcast will pay TiVo slightly less than DirecTV did.
  • TiVo will offer its service to Comcast subscribers from mid-to-late 2006, with the deal initially set for seven years and potentially renewable for up to eight years thereafter.
  • The advertising technology developed with Comcast could be used for all its DVR customers, providing a significant revenue stream for the cable operator.

Statistics:

  • TiVo's shares increased by 50% after the deal was announced.
  • Comcast has 21.5 million subscribers.
  • TiVo made approximately $1.30 per month in revenue per subscriber from DirecTV.
  • Comcast DVR customers already pay $10 per month, with an additional $2-$4 per month potentially charged for the TiVo service.
  • The deal will make TiVo available to approximately 21.5 million Comcast subscribers.

Sources:

  • Aline Van Duyn, New York (no publication date provided).
  • Tradition Asiel Securities (no publication date provided).
  • TiVo filing (no publication date provided).
  • People familiar with the transaction (no attribution or publication date provided).