TiVo's Growth Stays In Virgin Territory

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British cable operator Virgin Media drove TiVo's third straight quarter of positive subscriber growth, with the DVR company adding a net 206,000 subs for the quarter ended April 30.

But while TiVo expects subscriber momentum to accelerate through the rest of the year, the company posted a larger-than-expected net loss for the quarter -- of $20.8 million -- and expects a bigger loss for the current quarter because of higher litigation costs and marketing expenses to promote Comcast's VOD service on TiVo DVRs.

Virgin Media added another 242,000 TiVo subscribers in the first quarter, bringing it to a total to 677,000, or 18% of its entire base, in about a year.

"Virgin Media is growing its pay-TV subscriber base faster than its key competitors, which is a significant reversal in trends and remarkable given the tough economy in the United Kingdom," TiVo president and CEO Tom Rogers said in announcing results.

TiVo has deals with operators and broadcasters worldwide to offer DVRs to customers, including Charter Communications, DirecTV, Suddenlink Communications, RCN, Grande Communications, Virgin Media, Cablevision Mexico, ONO in Spain and Seven/Hybrid TV in Australia. Under TiVo's agreement with Comcast, the MSO is making its video-on-demand service available to TiVo retail DVRs, starting in San Francisco with other markets on tap.

But so far, Virgin has accounted for the entire turnaround in TiVo's subscriber growth. TiVo lost a net 29,000 retail subscribers in the most recent period, while netting 235,000 through operators. Year over year, total TiVo subscriptions grew 524,000, or 27%, to approximately 2.5 million.

TiVo has generated "very good results from our other operator relationships," Rogers said, noting that ONO and Grande doubled the number of TiVo subs since last quarter and RCN and Suddenlink continue to "contribute to our momentum." Additionally, the company is working with Charter to get broader distribution of the DVRs beyond the MSO's Dallas Forth Worth market as well as integration with future platforms.

Excluding DirecTV, TiVo has deals operators covering approximately 10 million subscribers and to date, less than 10% of those households have a TiVo DVR. Its MSO partners generated average revenue per TiVo subscriber of $1.02 per month in the most recent quarter, compared with $1.72 in the year-earlier period.

For the quarter ended April 30, TiVo reported net revenue of $67.8 million -- up 48% from $45.8 million in the year-earlier period. The net loss of $20.8 million compared with net income of $139 million in the same quarter last year, which included a one-time past damages payment from the Dish Network settlement of $175.7 million.

TiVo said it still expects to "significantly advance towards our aim of approaching breakeven adjusted EBITDA excluding litigation spend for the full year fiscal 2013," with sequential quarterly increases in MSO revenue throughout the remainder of the year driven.

In the second half of the year, the company expects to spend $5 million to $10 million less in R&D compared to the first half of the year, which TiVo attributed to the launch of several of products including the Slingbox-like TiVo Stream and an IP set-top box client to the four-tuner Premiere Q DVR.

However, TiVo expects higher legal costs in the second half of the year because of the impending patent-infringement trial against Verizon Communications, set for this fall, and its lawsuits against Time Warner Cable and Motorola Mobility.

Earlier Wednesday, TiVo announced that it will launch "TV Everywhere" Web portals for operators, beginning with RCN, which will let them offer content both in and out of the home on an iPad, a PC or other connected device.

Rogers also called out TiVo's recent deal with Pace. At the 2012 Cable Show last week the companies debuted their first joint offering that ports the TiVo user interface onto the Pace XG1 six-tuner gateway.

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