Best Buy To Introduce Insignia Internet-Ready TVs with TiVo

Best Buy will introduce Internet-ready Insignia LCD TVs with TiVo technology as it builds on a year-old alliance, TiVo CEO Tom Rogers said Monday at the UBS Global Media and Communications conference in New York. Best Buy is expected to ship a broad array of TiVo-equipped private label Insignia TVs and has amended the companies’ pact to include non-DVR products like TVs that can’t record to hard drives (CED Sept 15 p1).

Insignia sets account for about 20 percent of Best Buy’s total TV sales, Rogers said. The jointly developed TVs will have a new user interface designed to make them stand out at retail, Rogers has said. The first of the TVs was expected to ship late this year, but Rogers declined comment on the exact timing. Best Buy is working to build the TiVo interface into Insignia TVs, but minus the DVR, a spokeswoman confirmed in declining further comment. The addition of Internet-ready Insignia TVs would come after Best Buy, which also owns Napster, started the CinemaNow video download service.

Best Buy has been carrying TiVo’s standalone Premiere DVRs in the TV departments of its store. A recent promotion dropping the price of the entry-level TiVo Premiere to $99 with a one-year subscription to the DVR service helped boost sales of the product, Best Buy store staffers told us during the Black Friday sales in November. While TiVo has subsidized hardware prices in the past, the manufacturing costs of DVRs has “come way down,” lessening the financial impact of the strategy, Rogers said. TiVo expects the promotion will add $8-$10 million in losses to Q4 earnings, company executives have said (CED Nov 26 p3). “We'll see how the holiday pricing goes and make decisions from there” on whether to continue the promotion beyond year-end, Rogers said.

Meanwhile, the delay in shipments of the multi-room DirecTV HD satellite receiver/TiVo DVR, to early 2011, is largely tied to TiVo’s having to update its software to match changes in DirecTV features, Rogers said. TiVo’s DVR software for the satellite receiver is still being finalized, DirecTV executives have said. The combo product was originally slated for first half 2009 and has been delayed several times since. TiVo will likely be one of several flavors of DVR that DirecTV fields, DirecTV executives said. “We had to do some additional work to stay apace with other developments” in the DirecTV platform, Rogers said. There have been new features added since “we first scoped the product” in 2008, he said. Rogers declined further comment. Among other things, DirecTV added MoCA technology for multi-room viewing of content. TiVo and DirecTV jointly developed satellite receiver/DVRs until 2005, when DirecTV shifted to then affiliate NDS’ DVR platform.

Comcast “continues to spend a lot of money” with TiVo, but it isn’t having “having any success yet in accelerating” growth of tru2way-based advanced TV platform, Rogers said. The cable operator is continuing a three-year test with TiVo DVR software being downloaded to cable set-top boxes in the Boston area, but hasn’t extended it to Chicago as was originally planned. Comcast is continuing to work with TiVo on tru2way platform, a Comcast spokeswoman has said (CED Nov 26 p2). TiVo has since struck software/hardware distribution pacts with Cox Communications, Canal Digital, Ono in Spain, RCN and Suddenlink, the latter expected to start tests soon in a single market.

UBS Conference Notebook

Lionsgate Entertainment and billionaire investor Carl Icahn continued a war of words Monday as both braced for a Dec. 14 proxy battle at a Lionsgate shareholders meeting. The company remains “unsure” of Icahn’s plans for the company should he gain control and is “frustrated” by a lengthy process that began in February 2009 when Icahn bought a stake in the company, Vice Chairman Michael Burns said at the UBS conference. Lionsgate said it filed an amended lawsuit in U.S. District Court in Manhattan, alleging that Icahn secretly planned to merge the company with MGM, in which he owns debt, while he publicly opposed the combination. The goal was for Icahn to accumulate debt in MGM, while seeking to buy Lionsgate at a discount, Lionsgate said. MGM and Lionsgate are partners, with Viacom, in the Epix channel. In the amended complaint, Lionsgate claimed victory in Carl Icahn’s son Brett being dropped from a proposed slate of five challengers for election to the company board. Lionsgate filed the amended complaint to “remedy legal wrongs” including Icahn’s refusing to disclose the extent of his debt holdings in MGM and the length of his trading in it. Icahn dismissed the suit as “without merit” and called Lionsgate’s “transgressions in corporate governance” among the worst he has seen. Among the allegations were that board member Mark Rachesky, a Lionsgate investor, sought an advance copy of a “disclosure letter” as the company tried to ward off Icahn. Lionsgate diluted Icahn’s stake to 33 percent from 38 percent this year in a debt-for-equity swap that benefited Rachesky, Icahn said. Despite the battle with Icahn, “it’s been business as usual” although the proxy fight has cost Lionsgate a “fair amount of money,” Burns said. Lionsgate logged about $4 million in legal expenses in Q2 ended Sept. 30, according to an SEC filing. Meanwhile, Lionsgate expects its annual television-related revenue to grow to $1 billion from $320 million over 3-5 years as it expands Epix distribution beyond the 30 million homes it passes, Burns said. Epix, which launched a year ago, has carriage with Verizon FiOS and several MSOs and was a “few bucks profitable” in October, Burns said. Lionsgate owns 31 percent of Epix, which posted a $26 million loss in the quarter ended Sept. 30, down from $47.3 million at June 30. Epix reported $8.9 million in revenue in the quarter ended June 30, Lionsgate said. Lionsgate swung to a $29.6 million Q2 loss from a $31.7 million profit a year earlier partly because of a $14 million loss on its Epix investment. Epix has a streaming deal with Netflix that provides content to the video service 90 days after it’s available to MSOs. Lionsgate is preparing a sequel to the Expendables movie, and production is expected to begin in the spring, Burns said. Lionsgate remains interested in acquiring bankrupt MGM “at the right price,” he said. “It would be a terrific fit for us at the right price,” he said. MGM, which had $4 billion in debt when it filed for bankruptcy in November, is owned by Cerberus Capital Management with the backing of hedge funds Anchorage Advisors, Davidson Kempner Capital Management and Highland Capital Management.