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Comcast Funds TiVo App Expansion

Jeff Baumgartner
8/30/2007

Comcast Corp. (Nasdaq: CMCSA, CMCSK) has agreed to supply "significant" funding to port the TiVo Inc. (Nasdaq: TIVO) digital video recording (DVR) platform to other platforms supported by the MSO, including Scientific Atlanta set-tops, the DVR pioneer said Wednesday afternoon in disclosing its second-quarter results. (See TiVo Posts Q2.)

TiVo did not specify the SA-related funding it's getting from Comcast, but in a 10-K filed in mid-April, TiVo disclosed it had received, as of Jan. 31, 2007, $16.2 million in technology revenues from licensing and engineering work from the Comcast agreement. Comcast and TiVo announced the deal in March 2005.

The results of SA box development will ensure that Comcast can eventually introduce TiVo to its entire customer base. Currently, about 25 percent of Comcast's footprint is based on the SA digital platform. Comcast and TiVo initially have focused their efforts on the Motorola Inc. (NYSE: MOT) set-top platform.

Comcast is expected to roll out TiVo-powered DVRs on Motorola set-tops "shortly" in the operator's New England division, which includes metro Boston, Southeast Massachusetts, and New Hampshire. That marks another delay on the project, as analysts had expected the deployment to begin as early as August. (See Comcast to Kick Off Boston TiVo Party.)

During its quarterly call with reporters and analysts Wednesday afternoon, TiVo CEO and president Tom Rogers did not provide any specific reasons for the delay but was optimistic that things will get off the ground soon. He said a "very, very senior Comcast person" told him to "see some real action in September, and even more action in October on the rollout front."

TiVo has a similar deal in place with Cox Communications Inc. but had less specific guidance on when the Atlanta-based operator plans to deploy DVRs powered by its software and applications. Rogers did cite previous guidance that the Cox deployment would likely lag about six months behind the initial Comcast rollout.

"Having said that, though, we're still trying to see if things can be kicked off sometime this year with Cox. That's our current focus," he said.

Also on the cable front, Rogers said, Cablevision Mexico will begin distributing TiVo DVRs to customers "within the next week or two," and the operator will back the rollout with a dedicated marketing campaign. TiVo and that MSO announced the deal earlier this year.

TiVo is also trying to generate cable business at retail with a $299 high-definition model that sports a 160-GB hard drive and dual CableCARD slots. Tivo launched that model, which complements its more expensive, high-end Series 3 HD-DVR, at retail earlier this month. (See TiVo Courts Cable With New HD-DVR and TiVo HD Hits Retail.)

Although TiVo sees HD as the path to its future, tepid demand for its SD product contributed to a wider-than-expected loss of $17.2 million (18 cents per share) in the second quarter. Of that total, the company cited an $11.2 million inventory write-down and inventory purchase commitment charge linked to higher-than-anticipated inventory levels of long-lead-time components and parts for its standard-def Series 2 model.

"We are not abandoning this [SD-DVR] space, but have to refocus our marketing efforts to reach this consumer since retailers are now fully focused on HD," Rogers said.

— Jeff Baumgartner, Site Editor, Cable Digital News

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