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Associated Press
Update 5: TiVo to Make Customized Version for Comcast
03.15.2005, 11:22 AM

TiVo Inc., the struggling pioneer of digital video recorders, will make a customized version for Comcast cable subscribers, the two companies announced Tuesday. TiVo's share price soared.

The move will increase TiVo's presence in American homes as it faces competition from generic DVRs offered directly by leading cable companies. Comcast Corp. expects to begin marketing the new DVRs, which will carry the TiVo brand, by mid- to late 2006.

"The strong TiVo brand, the clear track record of customer loyalty it has and its cutting-edge features make this a terrific partnership and exciting new product for Comcast," Steve Burke, Comcast Cable president, said in a statement.

The deal calls for TiVo to adapt its software to work on Comcast's existing DVR platform, and it allows TiVo to extend to Comcast subscribers the advertising it sells in the form of interactive video clips that automatically appear in the TiVo menu.

"The chance to combine TiVo's unmatched DVR features and innovative advertising capabilities with the power of Comcast's advanced digital television services presents tremendous opportunities," said Mike Ramsay, TiVo's chairman and chief executive.

Comcast will continue to market its own DVR. Most new customers now get a dual-tuner DVR, which lets viewers record two shows at once as well as high-definition television; TiVo offers such features only to DirectTV satellite customers.

Comcast subscribers who opt for the TiVo service will get such features as "WishList," which recommends and sometimes automatically records shows based on past viewing habits, and the ability to schedule recordings over the Internet. Pricing has not yet been determined for the new Comcast TiVo service, which most existing Comcast DVR subscribers would be able to get through a software upgrade.

"With this agreement, we will be able to give our customers more choice to select the DVR service that best meets their needs," said Mark Hess, Comcast's senior vice president of digital television.

TiVo's share price jumped 52 percent, or $2, to $5.83 in morning trading on the Nasdaq Stock Market. Comcast shares dropped 3 cents to $33.96, also on the Nasdaq.

TiVo has been synonymous with digital video recording since it helped pioneer the industry five years ago. It controlled an estimated one-third of the market in 2004.

But the small company faces intense competition from deep-pocketed cable and satellite operators, which can afford to subsidize hardware costs and already have tens of millions of customers on their rosters. Those rivals charge consumers less per month for digital recording - Comcast now charges $9.95, three dollars less than TiVo.

Meanwhile, TiVo lost its exclusive digital recording supplier stance with DirecTV, and it has aggressively courted the cable industry for deals similar to the one announced Tuesday.

TiVo now has more than 3 million subscribers. But in the quarter that ended Jan. 31, the Alviso, Calif.-based company posted losses of $33.7 million, wider than the $12.4 million loss in the same period a year earlier.

TiVo president Marty Yudkovitz resigned earlier this year, and Ramsay said he would step down from the helm as soon as a replacement is found.

Comcast, the nation's biggest cable TV system operator, has not released DVR subscription figures but it is estimated in the hundreds of thousands. The Philadelphia-based company said it deployed more than 140,000 units in the fourth quarter last year.

Financial terms of the multiyear, non-exclusive deal were not disclosed.



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