TiVo Inks Charter Deal - Analyst Blog

A leading provider of advanced television services and personal video recorders (PVRs), TiVo Inc. (TIVO) announced a multiyear agreement with Charter Communications (CHTR) to deliver IP-enabled video platform. Terms of the deal were not divulged.

Charter Communication is a leading broadband communications company and the fourth-largest cable operator in the United States.

Charter plans to integrate TiVo's Web content, recorded TV and video on demand with its traditional cable television service. Under the agreement, Charter will deploy TiVo's services to provide an enhanced television experience.

Charter will leverage the TiVo user interface for a new and improved entertainment experience using a hybrid platform that leverages traditional cable and next generation IP technologies, the company pointed out.

The companies plan to launch the initial product phase in the markets covered by Charter at the year end. Charter will use TiVo's high definition user interface and TiVo Premiere set top box along with the new multi-room and non-DVR (digital video recorder) platforms. This will provide customers access to TiVo's digital video recorder through its Premiere set-top boxes.

After the completion of the initial phase, the companies will expand the service with new devices, features, and third party applications in including linear TV, video on demand, vast libraries of Internet-delivered video and IP applications.

The new service will enable customers to use cable, local news, Internet video, Facebook and Twitter updates from their TV.

TiVo is trying to gain a strong foothold in the growing array of media technologies through strategic alliances. TiVo signed a number of deals with Blockbuster, RCN, Virgin Media (VMED), Samsung and Netflix (NFLX) among others. Further, the company has inked partnership deals with Pandora and FrameChannel for the launch of its TiVo premiere and TiVo Premiere XL DVRs.

Recently, TiVo signed a deal with the Suddenlink Communications, the seventh largest U.S. cable operator, under which it will provide its software in non-DVR set-top boxes in the U.S. market for the first time.

The DVR market is still growing rapidly with penetration expected to reach up to 50% in the next 3 to 4 years. TiVo has made significant strides, differentiating its products from the generic DVRs offered by cable providers, which perked up its sagging market share and increased revenues.

However, intense competition from cable and satellite providers such as Comcast Corp. (CMCSA), Cox, Dish Network Corp. (DISH) and DirecTV (DTV) are threatening TiVo's DVR business.

Our long-term Neutral stance on the company indicates that the stock is expected to perform in line with the market for the next 6–12 months. The stock has a Zacks #4 Rank, a short-term Sell rating.

 
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