UPDATE-WRITETHRU: How long will it take before Wall Street’s cheers for TiVo CEO Tom Rogers turn into catcalls? The Street applauded the former lawyer and NBC cable big shot today following TiVo’s agreement to settle a seven-year patent dispute with Dish Network. TiVo shares were up 3%, to $9.86, after the satellite company’s cunning billionaire CEO Charlie Ergen agreed to pay TiVo $500 million. Dish made the payment so it could continue to provide its customers with DVRs that do things TiVo says it invented – including record one show while users watch another. Rogers says that means TiVo can pretty much insist that every DVR provider fork over a license fee. TiVo has already charged Microsoft, Motorola, Verizon, and AT&T with patent infringement. “The precedent is set” in TiVo’s favor, Rogers says as he vows to “aggressively enforce our intellectual property” rights. But TiVo is a DVR provider, not a law firm. And its core business is growing weaker each year. It had about 2 million subscribers in January – down from its peak of 4.4 million in January 2007. It has also consistently lost money for the last two years. Rogers continued to charge hundreds of dollars for DVRs capable of integrating Web video with conventional TV shows at a time when most consumers were satisfied paying about $10 a month for the simple, if often badly designed, DVRs that their cable or satellite providers offer. Meanwhile, Rogers’ pals in the cable industry let him down. Beginning in 2005 he cut deals with Comcast, Cox and others: They agreed to give TiVo about a buck a month for each subscriber willing to pay an additional fee to have TiVo’s user interface on their DVRs. But that strategy has been long on press releases and short on results as cable companies complained about how difficult it is to integrate TiVo software into their set-top boxes. As a result, all TiVo has are its lawsuits. It recently borrowed $150 million, mostly to ensure that it would have enough cash to keep the court battles going.
Although Ergen blinked first in his standoff with TiVo, he may have outsmarted Rogers by dragging the case out as long as he did. Bernstein Research analyst Craig Moffett says that Dish’s $500 million payment was “far less than we expected.” Dish, which has 14.2 million subscribers, no longer has to worry about a court order that would force it to turn off all of its DVRs. “That would have been a knock-out blow,” Ergen told analysts. And Dish now can count on TiVo’s help as the satellite company figures out what to do with Blockbuster, the bankrupt home video chain that Ergen just bought. TiVo is one of the few Web devices that offers its subscribers the movies that Blockbuster transmits through its video-on-demand service. “I hope we win the war, and that TiVo wins the war,” Ergen says. But investors seem more optimistic about Ergen’s prospects than they do about Rogers’. Dish shares were up nearly 19%, to $29.79 on Monday.
PREVIOUS, MONDAY AM: Dish Network CEO Charlie Ergen blinked first: The satellite company said Monday morning that it has agreed to pay TiVo $500 million to settle their long-running dispute over who controls key patents to the DVR. The agreement appears to strengthen TiVo’s hand in lawsuits against Microsoft, Motorola, Verizon and AT&T over whether DVRs that they’ve built also violate TiVo patents. TiVo says it controls the technology that enables DVRs to do things like record one show while the user watches another. But if Dish had lost its case in court, then it would have been at TiVo’s mercy: The DVR company could have demanded that Dish either pay a huge license fee, or turn off service to its customers’ DVRs.
TiVo and Dish now say that they plan to work together at Blockbuster, the bankrupt home video retailer that Dish just bought for $320 million. Although Ergen’s light on details, he says that the TiVo will “help develop our Blockbuster service.” Ergen is thought to be interested in using Blockbuster’s brand name to develop a service that would challenge Netflix in streaming movies and TV shows vis the Internet.
TiVo CEO Tom Rogers says that the agreement “demonstrates the significant return affording to our shareholders by diligent enforcement of TiVo’s property rights. Those efforts will aggressively continue with other parties.”
There’ll be more to come: TiVo will discuss the settlement in a conference call at 9 AM ET. Dish has a scheduled call to discuss 1Q earnings at noon.
Dish says in an SEC filing that the deal with TiVo was cut on April 29. The $500 million total includes $298 million that will be paid as a a “subscriber-related expense” through July 2018 when TiVo’s key patent expires. The settlement follows an April 20 ruling at the U.S. Court of Appeals in Washington that sided with TiVo on most of the important legal questions — but also gave Dish the opportunity to file appeals that would have dragged out the dispute.
Dish’s Ergen has good reason to want to put the TiVo case behind him, aside from his plans with Blockbuster. Dish has been losing customers. The company had 14.2 million subscribers at the end of March down 1% from the same time last year.
But time also was not on Rogers’ side. The company has steadily lost money and subscribers as it struggled to compete with the relatively inexpensive DVRs that cable and satellite companies provide their customers. Rogers hoped to turn things around by making friends with cable companies. Beginning in 2005 he cut deals with Comcast, Cox and others: They’d pay TiVo about a buck a month for each subscriber willing to pay an additional fee to have TiVo’s user interface on their DVRs. But that strategy has been long on press releases, and short on results as cable companies complained about how difficult it is to integrate TiVo software into their set top boxes. That left Rogers hoping for a big win in court against Dish, and the possibility of collecting license fees from just about anyone who sells DVR services. TiVo recently borrowed $150 million, mostly to ensure that it would have enough cash to keep the court battles going.


Wow, that’s a huge settlement. I’m sure TiVo is going to get even more money from other companies that infringed its patents.
Replay TV pre-dated DishNetwork’s involvement, no? Their machines perform(ed) the same functions.
Well how will Tivo help BB they already have it on their boxes. Will Dish provide free movies like Amazon or Netflixs to Dish owners.
I sure would like to be able to get the movies like my kids do, comcast, direct. They keep telling me to get rid of Dish. Thinking about it. I do not like to watch movies on computers, sorry……
I find it sad that tivo it’s in such a bad position. The company has led the way in dvr’s and still has the best product out there IMO. I hope they can find a way to survive and keep innovating
TiVo is the ONLY pleasant, usable DVR on the planet.
I can’t imagine being stuck with the horrid set top boxes Time Warner provides.
How can such a clearly superior product suffer so much?? What will I do if TiVo goes out of business!????
Dish had a superior DVR by the time Tivo got around to suing them.
They long ago went from being an innovative company to being a legal firm greedily clutching a dubious patent portfolio.
How come Time warner cable is not obligated to pay?
Good for TIVO but no one cares… They own the verb but not the product and these lawsuits will change nothing.
A settlement doesn’t give you precedent – a verdict does. Rogers is a moron.
And Ergen got hell of a bargain.
Disappointing that crooks like Ergen can get away with stealing technology,pay little for the theft, providing an inferior product and profit from it all. What a wonderful legal system we have.
My Dish DVR crashed out of the blue leaving me unable to retrieve over 40 hours of recorded content. The service tech who replaced it with another said almost half of their service calls are DVR related problems.
Tivo is a company that has always been poorly managed, they failed to take their product to the next level. There is no excuse for it not having at least 10 million subscribers today.
Tivo should never have been awarded the patent(s) in the first place.
That sort of digital recording is a simple, common thing. It is nothing special and Tivo does not do it in a novel or innovative way. They were able to patent a simple, common process. This points to incompetence in the US Patent Office.
DishNetwork, ReplayTV and Tivo announced and showed hard drive-based DVRs pretty much concurrently in 1999. Pretty hard to steal a proprietary recording scheme when everyone shows finished equipment at the same time. The DishNetwork DVR had the extra convenience of having the satellite receiver built right in. There was no need to coordinate the programming of the recorder with the satellite receiver or cable box to record multiple shops on different channels. Unfortunately, the DishPlayer ran on MicroSoft software, which was buggy for years.
As far as whose is better, in terms of functionality, the DishNetwork 622 and 722 are significantly better than any cable DVR, FIOS DVR, Direct TV DVR, or Tivo I have seen. They have features and functionality that is just not on the other DVRs. I have had a pair of 722s for four or five years and I am astonished that the competition has not caught up. It is not rocket science.
I have FIOS at my house for landline and internet. I would get the FIOS TV bundled in for a big price savings if they did not have such crummy DVRs.
Every week when I go into my Sam’s club to buy groceries, I am accosted by a couple of Direct TV sales ‘droids and if they will not take a polite “not interested” for an answer I stop and take a few minutes to illustrate how little they know about their product and what the competition offers. During the last few months, the best sound bite they can come up with is their DVR “is better than a Tivo!” So what. Big deal. If ever there were damning with faint praise…
As far as reliability goes, the Achilles heel of any DVR is the hard drive within. I have had two DVRs fail, and in both cases it was the Western Digital hard drive that died. In 13 years of using DishNetwork receivers (two at a time) those are the only failures I have had.
My aunt, on the other hand, had seven simple (no DVR) Direct TV receivers in five years, and three of them had to be reinitialized repeatedly by calling up customer service somewhere on the sub-continent and having them “hit” the receiver. All but the last receiver lasted less than a year.
Tivo has been hanging on for years with diminishing sales and outdated boxes, hoping for big cash settlements and licensing agreements instead of building a better mousetrap and selling the hell out of it. They deserve to fade away.
They DO NOT deserve any of Charlie’s money. Or, anyone else’s.