A leading provider of television services for personal video recorders, TiVo Inc. (TIVO) announced a partnership with ONO, the largest cable operator and a premier provider of broadband communication and entertainment services in Spain.
This strategic agreement will enable ONO to use TiVo’s next generation television (TV) comprising converged recording system in Spain. Blending ONO’s fiber optic network with TiVo's television user experience, ONO will offer users in Spain superior video service.
Moreover, ONO will enable a seamless convergence between Internet and traditional television content, thereby providing an integrated broadband and broadcast platform, including broadcast television, cable video-on-demand, and Internet delivered video in Spain, the company said. Thus, users in Spain with ONO Fiber Optics installed will be able to gain a total control over their television in the new audiovisual environment.
We are of the opinion that TiVo will attain success on the back of new wins and partnerships, which will open up major new markets and licensing opportunities for TiVO.
Under the partnership, TiVo will emerge as the exclusive software provider for all next generation set top boxes deployed by ONO, including both PVR platforms and traditional "non-PVR" set top boxes. Also, ONO will be the sole distributor of TiVo's advanced television services in Spain.
The deal will facilitate ONO’s implementation of the new television model and expansion of the next generation services for the Internet and Television sector in other countries, apart from Spain.
ONO and TiVo also look forward to collaborate on solutions that enable the TiVo experience available to consumers beyond ONO's cable footprint in conjunction with terrestrial and Internet delivered content. Specific details on the deal were not divulged.
To expand its global footprint, TiVo plans to roll out new services and enter into partnerships. Earlier, TiVo inked an international deal with Technicolor (formerly known as Thomson Inc.), a set-top box manufacturer to develop high-definition PVR set-top box for operators, worldwide.
TiVo had announced a partnership with Conax, a conditional access provider to offer European multi-channel operators a fully comprehensive end-to-end solution. TiVo also declared a strategic partnership with Virgin Media, under which it will develop interactive programs to build middleware and interface Virgin Media's next-generation high-definition set-top boxes in the U.K.
ONO and TiVo are keen to expand their partnership with other technology providers such as Nagravision and Cisco Systems Inc. (CSCO) to launch ONO's next generation TV platform. We believe TiVo is well positioned to benefit from this growth, attributable to its diversification and significant partnerships globally.
Intense competition and competitive offerings from cable and satellite providers such as Comcast Corp. (CMCSA), Cox, Dish Network Corp. (DISH) and DirecTV (DTV) are threatening its digital video recorder (DVR) business, resulting in reduced subscriber additions. Moreover, its long-standing patent infringement against Echostar Corp. (SATS) remains a significant headwind.
However, we expect new customer wins and partnerships, gradual roll out of distribution deals, new product launches and international diversification to drive long-term growth. Long-term growth visibility and stable outlook are reflected in our Neutral rating on the stock.
Our long-term Neutral stance on the company indicates that the stock is expected to perform in line with the overall U.S. equity market for the next 6–12 months. Consequently, we advise investors to retain the stock over the time period.
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