TiVo and DIRECTV Agree to Extend Relationship for Three Years

[blindlemon]

Agreement Guarantees Quality Service for Existing DIRECTV TiVo Subscribers; Also Addresses Intellectual Property

ALVISO, Calif., April 12, 2006 /PRNewswire-FirstCall via COMTEX News Network/ -- TiVo Inc. (Nasdaq: TIVO), the creator of and a leader in television services for digital video recorders (DVR), and DIRECTV, Inc. (NYSE: DTV), the nation's leading digital television service provider, today announced a three-year extension to the TiVo-DIRECTV commercial agreement.

Existing DIRECTV TiVo subscribers will be able to continue to receive the award-winning TiVo(R) service, with TiVo providing ongoing maintenance and support. In addition, TiVo and DIRECTV agree not to assert patent rights against the other. The agreement also extends the advertising relationship between the two companies. DIRECTV will continue to service existing DIRECTV receivers with TiVo service. While specific financial terms of the agreement were not disclosed, the recurring monthly economics of the agreement are similar to the economics for DIRECTV receivers with TiVo service activated since 2003.

"We are pleased to have reached an agreement with DIRECTV that will allow us to continue to provide our service to the more than 2 million DIRECTV TiVo households," said TiVo CEO Tom Rogers. "As the pioneer in the DVR market, we have created a service that is highly valued by consumers because of our technology, the wide range of our unique features and the unparalleled ease of our user experience. This agreement reflects TiVo's popularity among DIRECTV subscribers and importantly respects the value of our intellectual property as well."

"By extending our agreement with TiVo, we are ensuring quality support for DIRECTV customers who already own a DIRECTV TiVo unit," said Romulo Pontual, DIRECTV's chief technology officer. "We are pleased to cooperate with TiVo in a way that will best serve DIRECTV and our DIRECTV TiVo customers."

About DIRECTV, Inc.

DIRECTV, Inc. is the United States' leading digital television service provider with more than 15 million customers. DIRECTV is a world-leading provider of digital multichannel television entertainment services. DIRECTV is approximately 37 percent owned by News Corporation.

About TiVo Inc.

Founded in 1997, TiVo Inc. pioneered a brand new category of products with the development of the first commercially available digital video recorder (DVR). Sold through leading consumer electronic retailers, TiVo has developed a brand, which resonates boldly with consumers as providing a superior television experience. Through agreements with leading satellite and cable providers, TiVo also integrates its full set of DVR service features into the set-top boxes of mass distributors. TiVo's DVR functionality and ease of use, with such features as Season Pass(TM) recordings and WishList(R) searches, has elevated its popularity among consumers and has created a whole new way for viewers to watch television. With a continued investment in its patented technologies, TiVo is revolutionizing the way consumers watch and access home entertainment. Rapidly becoming the focal point of the digital living room, TiVo's DVR is at the center of experiencing new forms of content on the TV, s!
uch as broadband
delivered video, music and photos. With innovative features, such as TiVoToGo(TM) and online scheduling, TiVo is expanding the notion of consumers experiencing "TiVo, TV your way.(R)" The TiVo(R) service is also at the forefront of providing innovative marketing solutions for the television industry, including a unique platform for advertisers and audience measurement research. The company is based in Alviso, Calif.

NOTE: TiVo, Series2, 'TiVo, TV your way.' Season Pass, WishList, TiVoToGo and the TiVo Logo are trademarks or registered trademarks of TiVo Inc. and its subsidiaries worldwide. (C) 2006 TiVo Inc. All rights reserved.

DIRECTV and the Cyclone logo are trademarks or registered trademarks of DIRECTV Group, Inc.

This release contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements relate to, among other things, TiVo's service and marketing plans, future pricing strategies, and other factors that could affect future results. Forward-looking statements generally can be identified by the use of forward- looking terminology such as, "believe," "expect," "may," "will," "intend," "estimate," "continue," or similar expressions or the negative of those terms or expressions. Such statements involve risks and uncertainties, which could cause actual results to vary materially from those expressed in or indicated by the forward-looking statements. Factors that may cause actual results to differ materially include delays in product development, competitive service offerings and lack of market acceptance, as well as the other potential factors described under "Factors That May Affect Future Operating Results" in the C!
ompany's public
reports filed with the Securities and Exchange Commission, including the Company's Annual Report on Form 10-K for the fiscal year ended January 31, 2005, and the Quarterly Reports on Form 10-Q for the quarters ended April 31, 2005, July 31, 2005 and October 31, 2005. The Company cautions you not to place undue reliance on forward-looking statements, which reflect an analysis only and speak only as of the date hereof. TiVo disclaims any obligation to update these forward-looking statements.

SOURCE TiVo Inc.

Jeffrey Weir of Sloane & Company, +1-212-446-1878, or jweir@sloanepr.com, for
TiVo; or Robert Mercer of DIRECTV Inc., +1-310-726-4683, or RGMercer@directv.com


http://www.prnewswire.com


Copyright (C) 2006 PR Newswire. All rights reserved.

Good news for TiVo - and it looks like the Echostar patent suit is paying off already :up:

[dswallow]

http://www.tivocommunity.com/tivo-vb/showthread.php?t=295434

[jmoak]

Wow.... 2010....

Even though this seems to be worded to simply cover existing customers, the tivo platform IS capable RIGHT NOW to host their planned "VOD via the Internet" service they've been talking about.

WARNING! Give no credence to my rambling. Keep in mind I'm the guy who insisted they would never "dump tivo" given the low cost, the extremely low churn and off the chart customer satisfaction ratings. (and the confidence of the tivo supporters @directv)
I have since learned the lesson that common logic has no place in corporate america.

:o

[blindlemon]

http://www.tivocommunity.com/tivo-vb/showthread.php?t=295434I did a search for "directv" before posting but nothing came up.

Just tried it again and it still didn't find anything.... :confused:

[Gunnyman]

I guess the R-15 IS a big bag of suck :)

[interactiveTV]

I guess the R-15 IS a big bag of suck :)
I read it as avoiding the lawsuits and patent issue more than anything else, especially considering the timing.

Nothing about new MPEG4 Tivos so it seems more about "legacy" hardware than a future push.

Anyone know how long the transition to MPEG4 is slated to take on the DirecTV side?

Tivo wins by not having to spend on the two-way fight patent with DirecTV and gets the revenue stream as they "continue to provide service."

I don't see DirecTV dropping the NDS push or pushing new Tivo subscribers.

_ITV

[Markman07]

I don't see DirecTV dropping the NDS push or pushing new Tivo subscribers.

_ITV

Just give them time....... :D

[RARamaker]

Here is the filing with the SEC:

http://excite.brand.edgar-online.com/fetchFilingFrameset.aspx?FilingID=4340604&Type=HTML

On April 7, 2006, we entered into the Seventh Amendment of our Development Agreement, dated February 15, 2002, with DIRECTV, Inc. Under this amendment, which amends the expiration date of the Development Agreement from February 15, 2007, to February 15, 2010, we will continue to provide maintenance and support for DIRECTV receivers with TiVo service through the expiration date of the Development Agreement. In addition, DIRECTV will continue to have the right to distribute DIRECTV receivers with TiVo service through February 15, 2007, and a related grace period as set forth in the Development Agreement. Further, we agreed that neither party would assert its patents against the other party with respect to each company’s products and services deployed prior to the expiration of the agreement, subject to limited exceptions. DIRECTV will continue to pay a monthly fee for all households using DIRECTV receivers with TiVo service similar to the amount paid by DIRECTV for households with DIRECTV receivers with TiVo service currently being deployed, subject to a monthly minimum payment by DIRECTV. On an annual basis, we will reserve a portion of these fees as a non-refundable credit to fund mutually agreed development, maintenance, and support services.

The foregoing description of the Seventh Amendment of our Development Agreement with DIRECTV is qualified in its entirety by reference to the provisions of the agreement that will be filed as an exhibit with the Company’s Form 10-Q for the quarter ending April 30, 2006.

On April 7, 2006, we also entered into the First Amendment of our Amended and Restated Services Agreement, dated March 31, 2005, with DIRECTV. This amendment extends the term of the Services Agreement until February 15, 2010, and provides DIRECTV with the ability to obtain additional technical support and training for its use of advertising-related software tools with DIRECTV receivers with TiVo service.

The foregoing description of the First Amendment of our Amended and Restated Services Agreement, dated March 31, 2005, with DIRECTV is qualified in its entirety by reference to the provisions of the agreement that will be filed as an exhibit with the Company’s Form 10-Q for the quarter ending April 30, 2006.

Russ

[JimSpence]

Can we now expect future software upgrades for current DVR models, he asks rhetorically?

[stevel]

I would not hold my breath waiting for that.

[tbeckner]

I would not hold my breath waiting for that.I would never hold my breath, but since Dan Collins broke this story weeks ago and got flak over it, does Dan have more inside information on what this agreement means?

Dan where are you?

[Markman07]

Dan or TivoPony. You are wanted on the big Tivo Forum phone.

[ZeoTiVo]

I would love to see the letters the Lawyer's were sending back and forth

[newsposter]

Can we now expect future software upgrades for current DVR models, he asks rhetorically?

well here's the plan as it's been laid out to me jim....oh you said rhetorically ....sorry

[stevel]

I am quite certain that Pony would decline to comment on this, as would I if I were in his position. DirecTV already has in-house everything they would need to provide 6.2 for the HR10-250 and networking support for S2 DTiVos in general. This agreement doesn't change that.

[ZeoTiVo]

I am quite certain that Pony would decline to comment on this, as would I if I were in his position. DirecTV already has in-house everything they would need to provide 6.2 for the HR10-250 and networking support for S2 DTiVos in general. This agreement doesn't change that.

and nothing else will either unless DirecTV truly decides the NDS boxes are not useable. That seems to be a much larger leap beyond wanting to show investors of DirectTV they are pretty agreeably protected from any legal hassles over patents.

But watch - if TiVo wins against echostar this will be spun as bad news for TiVo becasue they sold out early on DirectTV :p

[interactiveTV]

and nothing else will either unless DirecTV truly decides the NDS boxes are not useable. That seems to be a much larger leap beyond wanting to show investors of DirectTV they are pretty agreeably protected from any legal hassles over patents.

But watch - if TiVo wins against echostar this will be spun as bad news for TiVo becasue they sold out early on DirectTV :p Actually, it was a cross patent fight. Tivo gets 3 more years of revenue from Direct. That ~$40m plus marketing will come in handy. Regardless of what happens with Dish, Tivo took the prudent course.

I think the error is jumping to conclusions about the NDS boxes. Nothing I see shows Direct changing course and nothing shows Tivo expending any resources on an MPEG4 DirecTV box -- which is the future.

Considering that neither Tivo nor DirecTV can predict the outcome of the Dish suit, it makes sense that this agreement was signed. Both sides can second guess it AFTER.

What's silly is the constant FRONT-RUNNING of anticipated "spin" that rarely occurs as a way to predict the future of posts.

One can argue that Tivo isn't that confident in the Dish suit. Or Direct isn't. Or both. Or neither. Or from a legaly bandwidth standpoint and the fact that there are still a bunch of DTivos out there, this makes sense for both parties. Nothing here today shows any sort of sign that Direct plans to abandon NDS. It's an illogical leap. Everything is "already own" so future sales remain off the table.

_ITV

[ChuckyBox]

Actually, it was a cross patent fight. Tivo gets 3 more years of revenue from Direct. That ~$40m plus marketing will come in handy. Regardless of what happens with Dish, Tivo took the prudent course.

Absolutely. This is a relationship that is ending, but TiVo nows gets those extra years of revenue, and maintains those households as an audience for it's advertising business. As we've seen, a patent fight is a long, expensive process. Here TiVo has a bird in the hand, and shows the world that it is willing to be very reasonable about its IP.

And maybe, just maybe, those long-suffering DTiVo users might get an upgrade or two. It could happen, it really could.

[ZeoTiVo]

Actually, it was a cross patent fight. Tivo gets 3 more years of revenue from Direct. That ~$40m plus marketing will come in handy. Regardless of what happens with Dish, Tivo took the prudent course. so you are saying you agree with my post then. This was exactly the way for TiVo to go - but the joke I threw on the end of my post was the media will see this as "bad for TiVo" if they win the echostar patent infringement suit.
I think the error is jumping to conclusions about the NDS boxes. Nothing I see shows Direct changing course and nothing shows Tivo expending any resources on an MPEG4 DirecTV box -- which is the future. yes, again my post totally agrees with that. It would have to be DirectTV to decide on their own - and it has little to do with patents now - if the NDS box is not meeting their requirements. If they reached that point they will need to decide where to go from there. It would not need to include TiVo. Myabe they license from the echostar patents depending on how things shake out ;)
Considering that neither Tivo nor DirecTV can predict the outcome of the Dish suit, it makes sense that this agreement was signed. Both sides can second guess it AFTER.

What's silly is the constant FRONT-RUNNING of anticipated "spin" that rarely occurs as a way to predict the future of posts.

One can argue that Tivo isn't that confident in the Dish suit. Or Direct isn't. Or both. Or neither. Or from a legaly bandwidth standpoint and the fact that there are still a bunch of DTivos out there, this makes sense for both parties. Nothing here today shows any sort of sign that Direct plans to abandon NDS. It's an illogical leap. Everything is "already own" so future sales remain off the table.

_ITV

I am sure all the advice both parties was getting was - do an amicable extension of the agreement and remove doubt from investors on both sides of any upcoming legal or support hassles. Both sides won from this and is how business should work when it is working well.

[David Scavo]

Absolutely. This is a relationship that is ending, but TiVo nows gets those extra years of revenue, and maintains those households as an audience for it's advertising business.
Exactly. It appears that DirecTV can still only distribute DirecTIVOs for the same time period (thru 2007) as before, but they did extend the time period that existing DirecTIVO users can use DirecTIVOs (thru 2010 - yeah!)

[ChuckyBox]

Exactly. It appears that DirecTV can still only distribute DirecTIVOs for the same time period (thru 2007) as before, but they did extend the time period that existing DirecTIVO users can use DirecTIVOs (thru 2010 - yeah!)
I was wondering about the distribution issue. I can't believe that DTV didn't want at least the option to keep distributing DTiVos, and the new agreement did stick in some kind of grace period, so it seems like TiVo didn't want to allow DTV to keep selling the boxes. That would tend to fit in with TiVo's wooing of cable companies, since part of the attraction there is to steal back satellite customers and prevent churn over to satellite. Tivo can say: "Yes, DTV will still have TiVo customers, but they'll be using older systems, and DTV won't be able to add new TiVo customers..."

[stevel]

Exactly. It appears that DirecTV can still only distribute DirecTIVOs for the same time period (thru 2007) as before, but they did extend the time period that existing DirecTIVO users can use DirecTIVOs (thru 2010 - yeah!)

No, that didn't change either. Even before this agreement, DirecTiVo users could continue to use their boxes past 2007. Before the new agreement, TiVo would not be obligated to help DirecTV with any software issues after 2007. Now they are through 2010.

There is no end date by which DirecTiVos must stop functioning. DirecTV can continue supporting existing boxes forever should they choose to.

[ChuckyBox]

There is no end date by which DirecTiVos must stop functioning. DirecTV can continue supporting existing boxes forever should they choose to.
Unless this new agreement changed that.

[Arcady]

Even before this agreement, DirecTiVo users could continue to use their boxes past 2007.

I hope to keep at least one DirecTiVo unit functioning for decades, just to annoy DirecTV. :D

I really don't understand why they are so afraid to upgrade the HD units. They would keep MRV and all the other networking turned off, like on the SD units, so what's the big deal in making our units faster than glacial?

[mattack]

There is no end date by which DirecTiVos must stop functioning. DirecTV can continue supporting existing boxes forever should they choose to.

and in other threads where people were paranoid that their DirecTivo would stop working, others have said that very early (I don't know if absolute day 1) DirecTV boxes still work/are supported.

[stevel]

and in other threads where people were paranoid that their DirecTivo would stop working, others have said that very early (I don't know if absolute day 1) DirecTV boxes still work/are supported.
True, but that doesn't really tell you anything about DTiVos since the DirecTV-only boxes don't involve some other company's licensed technology.

However, TiVo's own 10-K says that DirecTV can continue to service DTiVo customers after the support agreement expired (was end of 2007).

This new agreement has no direct impact on existing DTiVo users. It does not give us anything, it does not take away anything (unless there's something more than what has been reported.) It does allow for the possibility of further software updates, but I for one would not want to bet even a nickel on that happening.

[MichaelK]

No, that didn't change either. Even before this agreement, DirecTiVo users could continue to use their boxes past 2007. Before the new agreement, TiVo would not be obligated to help DirecTV with any software issues after 2007. Now they are through 2010.

There is no end date by which DirecTiVos must stop functioning. DirecTV can continue supporting existing boxes forever should they choose to.

And the flip side was previously DirecTV didn’t have to pay a cent either- goodbye 2 million a month from DirecTV….

Also- the SEC filing clearly had restrictions to what TiVo was willing to waive as far as patents. It didn’t say that TiVo would absolve DirecTV of any and all patent infringement. I wonder what the extent of that is…


I also wonder what happened to the right Directv had to buy the tivo source...

[MichaelK]

... It does allow for the possibility of further software updates, but I for one would not want to bet even a nickel on that happening.



Tivo is obligated to set aside some of the income for maintenance so we may see some bug fixes if anything odd pops up like that thing with the internal clock error/issue a while back causing the missing guide data error. Past that I wouldn’t bet that nickel either…

[RGM1138]

I'm comfuzed. I remember last year on G4, they made a big deal out of DTV dropping TiVo. (Even had a skit where a box marked 'TiVo' was banged on the ground several times for effect).

So, what happened?

Bob

[ZeoTiVo]

I'm comfuzed. I remember last year on G4, they made a big deal out of DTV dropping TiVo. (Even had a skit where a box marked 'TiVo' was banged on the ground several times for effect).

So, what happened?

Bob


it was patently better for DirectTV to avoid legal hassles

[curtis0620]

TiVo software to begin downlaod to R15's soon.

[Cudahy]

It's long seemed obvious to me that it is very much in the mutual interest of Directv and Tivo to at least partially merge. Greed always gets in the way, but with Tivo struggling and Directv having troubles trying to duplicate Tivo that mutual interest should be greater than ever.

[ZeoTiVo]

but with Tivo struggling

TiVo is struggling a lot less these days and they havea poison pill in place for takeover bids. I think TiVo has zero interest in any merger or buyout.

now making deals with 3rd parties for content or license of TiVo software, that thye have a lot of interest in.

[ChuckyBox]

I think TiVo has zero interest in any merger or buyout.

TiVo's interest in making such an arrangement varies in direct proportion to the size of the offer.

[ZeoTiVo]

TiVo's interest in making such an arrangement varies in direct proportion to the size of the offer.


and who keeps control of the combined entity - which is most likely a much bigger factor now that TiVo has a more enforceable patent portfolio.

[jfh3]

TiVo software to begin downlaod to R15's soon.

No chance. The agreement doesn't allow for this, even if the port was done (which I seriously doubt)

[ChuckyBox]

and who keeps control of the combined entity - which is most likely a much bigger factor now that TiVo has a more enforceable patent portfolio.
Well, if the "merger" were with Cisco or Comcast or Apple, it wouldn't be TiVo keeping control. If it were with Akimbo, it would probably be TiVo, but I don't think we are talking about that kind of deal.

[RGM1138]

it was patently better for DirectTV to avoid legal hassles

Ah. Well, whatever works. I expect to be in the market for a DirecTiVo soon. So, I'm happy. :)

Bob