Fri September 19, 2003 05:34 PM ET
By Franklin Paul
NEW YORK (Reuters) - Satellite TV provider DirecTV would be better armed to fend off rival EchoStar while teamed with television recording company TiVo Inc.TIVO.O , even after News Corp. Ltd.NCP.AX , which owns similar technology, acquires DirecTV, TiVo chief executive Michael Ramsey told Reuters.
"We have spent four years developing a technology base with DirecTV that is pretty deep," he said in an interview this week. "My view is ... the more competitive this market gets, the more they are going to want to stick with us."
With Rupert Murdoch's News Corp. set to buy DirecTV from Hughes Electronics GMH.N , TiVo finds itself in an unusual position. Its advanced digital video recorder (DVR) technology is popular with DirecTV subscribers -- those who use it are less likely to quit DirecTV in favor of rival EchoStar Communications Corp. DISH.O or cable TV.
But analysts have said News Corp. owns all the technology it needs to replace TiVo at some point. News Corp. controls NDS Group Plc. NNDS.O whose TiVo-like service SkyPlus is used on Murdoch-controlled British Sky Broadcasting Group Plc.BSY.L
Indeed, this week NDS beefed up its systems by buying Thomson's TMS.PA Mediahighway set-top box technology unit.
Earlier this month, Murdoch told an investment conference here that the satellite television industry is likely to offer DVRs for free or at very low costs within a year, as it fights to retain subscribers and win new ones.
COMPETITION AGGRESSIVELY OFFERING DVR
Nearly half of TiVo's 800,000 subscribers come through DirecTV, and in its most recent quarter, its subscriber growth was aided significantly by promotions at DirecTV. Users pay about $200 for the DVR set-top box.
EchoStar, the No. 2 U.S. satellite television operator, in August set plans to give away its own DVRs if customers signed up for a one-year or two-year contract and a commitment to subscribe to certain programming packages. EchoStar in the past has said it is the top provider of DVRs, although it has never disclosed its subscriber figures.
"EchoStar has been aggressive on the DVR side. That has prompted DirecTV to become much more aggressive themselves ... driven by their competitive position with respect to EchoStar and wanting to beat them," Ramsay said.
Several cable providers, including Time Warner Cable AOL.N and Cox Communications COX.N have begun to offer DVRs to their customers.
TiVo has stressed that its service, unlike that of its rivals, offers more than the ability to record from TV. Subscribers, who pay a monthly fee, can also make the device seek out and record a particular program or a full season, or save shows based on viewing patterns.
He noted that TiVo's past advertising and promotional deals with Fox Entertainment, another News Corp. arm, should raise the value of TiVo in Murdoch's eyes.
"(The acquisition) is an opportunity for TiVo with News Corp. in a broader sense than just what we are doing with DirecTV," he said.
Ramsay added that the company is optimistic about off-the-shelf sales of its devices, via retail stores such as Best Buy. The company offers its "Series2," models which can record up to 80 hours of programming, for about $350.
TiVo licensees Pioneer Corp. 6773.T and Toshiba Corp.6502.T are also set to introduce recordable DVD players with TiVo built-in, which allows consumers to put shows they have recorded onto DVD.
Shares of TiVo closed on Friday at $9.93, down 2 cents.
