SAN JOSE, Calif. — Shares of TiVo Inc. rose 8 percent Wednesday after the digital video recording pioneer announced it had extended a partnership with satellite TV provider DirecTV Group Inc. for another three years.
Under the agreement, DirecTV will continue to provide TiVo service to its existing subscribers. Both companies also extended their advertising relationship and agreed not to assert patent rights against each other.
The extension is good news for TiVo: 2.8 million, or nearly two-thirds, of TiVo's 4.4 million subscribers as of January were DirecTV subscribers who bought the satellite company's TiVo-based receivers.
With DirecTV having recently begun switching to a competing technology from its sister company, News Corp.'s NDS, industry analysts had questioned whether TiVo would be entirely cut off from DirecTV when the old contract expires in February 2007. TiVo could have lost its existing DirecTV subscribers, each of whom brings TiVo roughly $1 a month.
"People are able to look at the certainty of this deal — that not only will DirecTV subscribers continue to get our service but we will continue to be paid for it," TiVo's CEO Tom Rogers said in a phone interview.
DirecTV spokesman Robert Mercer said the extended agreement does not change DirecTV's plans to continue using NDS' DVR technology for its receivers.
The two companies didn't disclose specific financial terms of the deal but said the economics were similar to their original 2003 agreement.
TiVo's revolutionary technology lets people record television without the hassles of video tapes. Users can pause live TV, do instant replays and begin watching programs even before the recording has finished.