In my occasional travels in — and conversations with — Silicon Valley, I get to speak to some very smart, very observant people. Not company insiders, but savvy "insiders" of the Tech scene.
I recently mentioned that TiVo’s (OTC: TIVO) management seems to be all over the place, both philosophically and managerially (see Goodbye Tivo). Their business model is suffering, and despite having first mover advantage and the best product in the category, they don’t seem to be able to make a buck.
This is a shame, as TiVo is one of my very favorite toys, and I would be quite distraught if they went bye-bye. It works exceedingly well with my DISH.
In batting this around, we reached a few interesting conclusions: a) TiVo’s recent shifts are not random, and are probably in response to some longer term strategic shifts; 2) something significant was going on with the company.
What might that be?
Our best guess (and this is only a guess, with a smidgen of wishful thinking thrown in) is that TiVo is about to be bought. Their market cap is well under $1/2B, and so for a minor premium — wild guess: $750 million or $8 a share in stock — they get taken out; Sooner rather than later — probably over the next month or so.
A close friend who has no ties to the company thinks the firm that makes the most sense to grab them is Echostar (OTC: DISH).
Echostar competes with Direct TV, which used to use TiVo (you can even see the logo on their DVR page) but are now rolling out their own DVR. TiVo becomes a competitive feature for DISH in their wars with Direct TV, uses TiVo as an added feature for their Users, and of course could sell through to this base and monetize this much faster than TiVo has been able to do. Clearly, a premium sch as this would work well with Echostar’s large installed base.
TiVo, taken out by DISH. You read it here first . . .
UPDATE October 9, 2005 10:46am
A reader points out in the comments that PVR Blog has a long discussion (from February) asking the question: "Why would Apple even want TiVo?"
Dish? i don’t know about that… it seems to make more sense that Apple, with several billion in cash and rumors of an ‘iTunes Music Store for Video’, would want to own the TV’s coaxial input. Seems like an easy way for Apple to move into the living room. Add a superdrive to the TiVo and burn your shows, move your TiVo’d shows to some new iPod Video. Apple’s earnings are on Tuesday and on Wednesday they are having a special ‘media event’.
Apple makes a lot of sense — a lot of TiVo engineers are former mac designers.
I would think Apple might prefer something they invented in house — but given the relationship, that makes some sense.
BLR: A friend writes this to me:
Things to consider:
1.) trial against Echostar, filed in 2004, begins later this month and TiVo has already received a favorable ruling early on. A win for TiVo =royalties from Echostar (and eventually MOT, SFA, NDS..), damages, and a better relationship with every cable operator.
2.) Tom Rogers from Primedia took over in May. I met with him for about an hour and think he is just now gettinghis handle on the company. Be surprised to see a sale tihs quick. CFO just resigned too, dont think he wouldve left money on the table.
3.) HD-DVR will be out in 2006, should be a good product upgrade cycle for TiVo.
4.) Tivo to go partnership with MSFT could turn out to be much bigger down the road
5.) They have struggled to get deals with big MSO’s, but they did get a deal with NCTC, which gives them access to 15 mln subs, wihch is about 75% the size of Comcast. Also, it is not cost effective for DirecTV to walk away from TiVo, as some have claimed, because it would cost a ton of money to ake the switch attractive for its customers as DTV would have to subsidize a massive hardware replacement that would take years to pay for itself.
6.) Their user friendly interface is why people like Tivo, it hasnt been replicated by anyone.
7.) tivo now has deals with CVC, CMCSA, and DirecTV, so a sale of the company likely wouldnt be to a cable copmany
full disclosure: I own this; What do you think?
I agree, Apple would make tremendous sense, and Apple has a surprise product announcement scheduled for this wednesday and Christmas is coming.
I know it won’t happen but I’d really like to see Tivo make a deal that is revolutionary instead of evolutionary, perhaps addressing content and not just distribution. For example, they could partner with Disney and sell 4 premium Tivo models: a Baby Einstein-loaded model for parents of babies, a disney/pixar model for 3-13yr. olds, a disney princess model aimed at young girls, and an ESPN sports nut model. The content would take up maybe 1/3-1/4 of the hard drive and could be instantly accessible by a button on the remote. The rest could be used for traditional Tivo functions. Based on what equivalent DVD sets cost, I think they could easily get an extra $100-$150 per unit for these premium models. That would, however, require thinking outside the Tivo box.
More rampant Apple/Tivo speculation is here:
The comments are interesting.
TIVO doesn’t go to APPLE, because APPLE wants to make iTunes their video outlet. Too much IP to deal with when you start ripping TV shows via your TIVO and downloading them onto your iPod.