TiVo shares slipped 6 percent on Monday after a rival recording device maker said it would start supplying technology next year to DirecTV Group, a satellite TV company that is TiVo's biggest
source of new customers.
NDS Group, a British digital TV technology company, said on Monday that it plans to ship digital video recorder technology to DirecTV in the first quarter of 2005. NDS, like DirecTV, is controlled by media conglomerate News Corp.
The news about the increasing partnership between NDS and DirecTV follows several events that have shaken investors' confidence in Tivo's relationship with the satellite company. These include DirecTV's sale of its stake in TiVo in June and the resignation of DirecTV's chairman from TiVo's board.
TiVo, which has a contract to supply digital video recorders (DVRs) to DirecTV through 2007, has previously said that given a choice, DirecTV subscribers would pick TiVo's DVR service, which has unique features, programming and home-networking options.
Last week, some DirecTV users reported a software glitch that froze playback of stored shows on some boxes that access TiVo's DVR service.
Investors have worried that Rupert Murdoch's News Corp. might push DirecTV to dump TiVo altogether. Some analysts have countered that by pointing out that with nearly 1 million DirecTV subscribers using TiVo's devices, it would not be smart for the satellite company to drop TiVo.
A TiVo representative said on Monday that the NDS announcement was "not a surprise," and that the company's relationship with DirecTV remains the same.
DirecTV spokesman Bob Marsocci said the satellite service provider plans to offer TiVo machines alongside "a new DVR product."
"Anything we think can grow this business is good for us, good for shareholders, and good for consumers," he said.
DVRs allow viewers to pause and rewind live TV, and make digital recordings of their favorite shows. Satellite providers DirecTV and EchoStar Communications have used DVR as a key competitive tool against their rivals, cable TV companies.
Tivo shares were down 31 cents, or almost 6 percent, to $5.32 in afternoon trade on Monday, after earlier hitting a session low of $5.27. The company said last month it would cut prices and develop a plan to deliver programming via the Internet in an attempt to increase its subscriber base.
NDS stock rose 87 cents, or almost 4 percent, on the Nasdaq to $23.85.
Story Copyright © 2004 Reuters Limited. All rights reserved.
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