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Last Updated: Wednesday, 9 June 2004, 10:24 GMT 11:24 UK
Murdoch defection hits TiVo hopes
TiVo box
TiVo allows viewers to mix their own schedules, and skip the ads
TiVo, the television-on-demand service that is seen as a threat to traditional broadcasting, has suffered a blow with the desertion of a major shareholder.

DirecTV, a satellite firm bought by Rupert Murdoch's News Corp empire a year ago, sold its entire stake in TiVo, causing its shares to fall 14%.

US firm DirecTV has become the main source of new subscribers to TiVo.

The sale could be the first step in Mr Murdoch's assault on TiVo, which allows users to pause and skip broadcasts.

Switching over

DirecTV insisted that the sale of the TiVo stake, which raised $24m, was consistent with its new strategy of divesting non-core interests.

If it now chose to end its relationship with TiVo, its decision to sell its stake could be seen as a violation of securities laws.

There has been speculation that DirecTV is developing its own digital video recorder.

But the deal does highlight a difficulty for TiVo: the firm relies on broadcasters for technological cooperation, building its technology into their set-top boxes, but also competes directly with their business models.

The rise of TiVo is seen as a threat to advertising, since many users fast-forward through commercial breaks, and the individual nature of TiVo programming makes viewer tastes harder to judge.

Changing channels

As a result, TiVo has tried to carve out new technological channels.

At the same time the DirecTV sale was announced, TiVo launched plans for an internet-based service, which will download programmes online without using the services of broadcasters.

Aside from the operational advantages of bypassing media rivals, the service could allow viewers a far wider choice of programming, TiVo says.

The idea of using the internet to distribute television programmes and movies is not new, but no firm has yet come up with satisfactory technology.

TiVo has not yet said when such a service could become available.

Murdoch extends his reach
10 Apr 03 |  Business
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14 Feb 03 |  TV and Radio

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