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TiVo narrows loss; allies with cable for future success

Thu, 03/08/2007 - 7:07am
Brian Santo, CED

TiVo may look back on 2006 and 2007 as a pivotal period in its history. The company began digging itself out of the red in its fourth quarter. And though TiVo's DBS partner turned on it last year, the company began to find solace within the cable industry.

For the fourth quarter, TiVo's service and technology revenues increased 22 percent to $57.4 million. That helped cut the company's loss to $18.7 million, down from $21.1 million in Q4 2005. The company plans to break even - on an EBITDA basis - in 2008.

TiVo-owned subscription gross additions were 163,000, increasing overall TiVo-owned subscriptions to 1.7 million. DirecTV still accounts for a million more TiVo boxes than TiVo has sold itself - 2.7 million, though diminishing with churn. The DBS company is turning to a DVR of its own and is phasing out the TiVo boxes.

In response, TiVo turned around and signed agreements last year with Comcast, Cox Communications, and Cablevisión Mexico. TiVo said Comcast has already begun trials with a TiVo-based DVR. TiVo also unveiled its Series3 High Definition Digital Media Recorder, among the first CableCARD-compatible consumer electronics products.

In recent months, TiVo also began providing broadband content through direct downloads. Within the last few days, TiVo turned on the Unbox video service it announced last month with Amazon.com. TiVo announced a similar deal with Earthlink just yesterday (story here).

It entered music download deals with MusicChoice and Rhapsody.

During the fourth quarter, TiVo wanted to get rid of its inventory of single-tuner models, which it did through a promotion in which it gave away the boxes, but increased the price of the TiVo service.

"We learned the concept of a free after mail-in rebate offer in retail is not as compelling as a free online offer, and there are clear limits to using subsidies to grow volumes in retail," CEO Tom Rogers said in a statement. As a result: no more free giveaways, a decision that heartened analysts.

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