TiVo/Cox Deal: Is It Enough?
News Analysis Alan Breznick, Cable/Video Practice Leader, Light Reading 8/25/2006
The agreement with Cox, now the fourth largest MSO in the U.S. with 5.4 million basic cable subscribers, is the second pact that TiVo has signed with a major cable operator in the past year and a half. The DVR maker, which has been scrambling to find cable and telco marketing partners since it lost its exclusive pact with DirecTV last year, signed a similar deployment deal with Comcast Corp. (Nasdaq: CMCSA, CMCSK) in March 2005. TiVo also notched a DVR-DSL co-marketing agreement with BellSouth Corp. (NYSE: BLS) about a month ago.
Industry analysts applaud TiVo's new cable strategy. But some question whether the Comcast and Cox deals will really provide that much of a revenue boost for TiVo. In a fresh dispatch from Wall Street, for instance, Friedman, Billings, Ramsey & Co. analyst Brian Coyne argues that the Cox pact will generate no more than $3 million in additional annual revenue for TiVo by 2009.
"While we recognize the positive aspects of this deal, as it helps ensure the longer-term survival of TiVo's software, we have difficulty seeing how this agreement results in a meaningful new growth opportunity for the company," Coyne writes in a note to investors. Even if all major U.S. MSOs struck similar deals with TiVo, he posits, it would produce no more than $35 million to $40 million in annual revenue for the firm by 2009, or less than 20 percent of TiVo's projected 2007 sales of $240 million.
Read the whole story at Cable Digital News.
— Alan Breznick, Site Editor, Cable Digital News