Market Overview

TiVo Executives Talk Netflix Deal

TiVo Executives Talk Netflix Deal

Shares of TiVo Corp (NASDAQ: TIVO) had quite a volatile trading session Tuesday.

After the company announced expanded partnership with Netflix, Inc. (NASDAQ: NFLX) late Monday, TiVo shares rallied about 6 percent by the open on Tuesday. Although TiVo's stock closed up only 0.2 percent Tuesday afternoon, the news and initial price action got some investors excited about the prospects for the company.

Benzinga sat down with TiVo's chief financial officer, Peter Halt; vice president of investor relations, Peter Ausnit; and senior vice president of user experience, Michael Hawkey, to talk about the expanded partnership.

"[This] is a very good deal for shareholders and does a couple things for them,” Halt said. “[It] establishes the value of our intellectual property, as well as the IP portfolio we are licensing in the OTT space.”

For the uninitiated, OTT stands for over-the-top, a part of the market TiVo has a presence in but hopes to expand greatly moving forward. According to Variety, Netflix, HBO Go and Hulu have exemplified the OTT space, but new players are emerging on a regular basis.

"On the product side, it's phenomenal for the company and investors to have locked up the relationship with Netflix in terms of its positioning in the user experience that we offer our MSO customers," said Halt.

MSO stands for multiple system operator. Halt said the deal with Netflix "allows us to go to MSOs and provide Netflix in the discovery experience without the user having to go get a license [for Netflix content]."

Hawkey highlighted why TiVo management has liked working with Netflix as a partner in the past:

  • Searching content; TiVo users can search their local box, but also services like Netflix.
  • Extending presence into international markets.
  • Allowing smaller operators to bring Netflix to their customers.

Litigation Uncertainty Disappears

JPMorgan analyst Sterling Auty covered the news, and the implications for TiVo in a note released Tuesday, maintaining an Overweight rating for the stock and $34 price target.

Auty highlighted the legal battles between the two companies and the mitigated uncertainty and saved legal cost implied by the recent agreement. TiVo’s CFO reinforced this positive outcome as well.

"We're no longer litigating with Netflix," Halt pointed out. "To remove that uncertainty around Netflix litigation is positively received by holders in the market."

When asked about the future of OTT and TiVo, Halt said, "We have a very strong belief as far as [content] discovery goes [...] we allow [users] an environment where they can find whatever kind of content they want."

Partnering with OTT providers like Netflix "is not just the user experience," according to Halt. "It's the systems behind it, the meta data, the analytics of what consumers are watching so you can help them find better content." And with better content also comes better advertising.

"OTT is a massive part of where the video/media world is going," Halt concluded.

Image Credit: By Evan-Amos - Own work, Public Domain, Wikimedia Commons

Posted-In: Analyst Color Long Ideas News Contracts Reiteration Management Analyst Ratings Movers Best of Benzinga


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