Media Money with Julia Boorstin

TiVo's CEO on Lawsuit, Earnings

It's been a busy 24 hours for TiVo, which late Wednesday announced earnings AND filed a patent-infringement suit against Verizon and AT&T . TiVo defines the digital video recorder business-- the company name has become a verb, which says a lot. And now the company is taking on competitors that employ technology that it says violates three of its patents. Tivo's CEO Tom Rogers tells me they shown the telecom companies that they're willing to enter into a commercial relationship with them, and when they didn't see any interest in making a deal they decided to take the steps to protect their intellectual property. The suit against Verizon and AT&T is similar to the suit filed against Dish and EchoStar back in 2004. Judges have ruled several times in TiVo's favor but the defendants continue to appeal.

The company reported it swung to a $2.94 million second-quarter loss as the company lost 146,000 net subscribers, but this still exceeded analyst estimates. Sales dropped 12 percent to $57.4 million in the second quarter, but this again, beat Wall Street forecasts and is a slight sequential increase from the prior quarter.  This quarter will continue to suffer from some economic pressures, Rogers saying he expects "tough sledding for a while in terms of consumer spending." But he's generally optimistic about consumer electronics holding up relatively well, and certainly it seems that through a downturn where people are staying home and watching more TV, it continues to be relevant.

Rogers points to some upcoming catalysts. DirecTV and Comcast are both rolling out their DVR service. The company is working with Best Buy to build TiVo's DVR capability into store brand TV sets, and Best Buy will use the relationship to build their own content-distribution platform. I'm intrigued by some of the more innovative capabilities TiVo is adding. It recently launched its "Stop Watch" local markets ratings service which is collecting TiVo subscriber viewing data, anonymously of course, in a handful of key markets. As we saw with the news that media and advertising giants are teaming up to launch a supplement to Nielsen, there's definitely demand here. It's also interest that TiVo is offering hundreds of *web* video channels to watch through its DVR. Can TiVo become the key bridge to Americans' gap between their TV and the web?

Questions?  Comments?