DirecTV sells TiVo stake

DirecTV, the satellite broadcaster, has sold its shareholding in TiVo, raising concerns that the pioneering technology group is about to lose its exclusive relationship with its largest customer.

However, DirecTV on Tuesday insisted that relations between the two companies remained strong. The sale was announced just a few days after Eddie Hartenstein, DirecTV's vice chairman, said he was stepping down from TiVo's board.

The move comes as DirecTV - controlled by Rupert Murdoch's News Corporation - is putting personal video recorders such as those designed by TiVo at the centre of its strategy to meet its target of signing up 3m new customers in the next three years.

TiVo pioneered PVR technology, which allows viewers to pause live television, skip commercials and record their favourite shows.

But cable TV groups and rival satellite broadcasters have developed their own services, raising concerns that TiVo will be sidelined. Of TiVo's 1.596m customers at the end of April, 872,000 were DirecTV subscribers.

DirecTV executives believe that as storage capacity on PVRs increases they will be used to store pay-per-view movies, personalised clips, and other content aside from standard television programmes. Hardware prices are also expected to fall.

At the moment, DirecTV subscribers who want a PVR buy a set-top box with a built-in hard drive for $99 and take a discounted monthly subscription to TiVo's service. EchoStar, the rival US satellite operator, gives its boxes away free to subscribers who pay a monthly rental fee.

NDS, another company controlled by News Corp, has developed rival PVR technology which is currently being used by British Sky Broadcasting, the UK-based satellite broadcaster which is also part of Mr Murdoch's empire.

David Farina, an analyst at William Blair, said he doubted DirecTV would end its relationship with TiVo. TiVo shares fell 14.5 per cent to $6.41 after Mr Farina reported the share sale in a note to clients.

TiVo said it would not comment on trading in its shares. A DirecTV spokesman said: "We have a strong relationship with TiVo and it is an important part of our product line."

Source: FT.com.