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DirecTV Sells TiVo Holdings

El Segundo, Calif. – One day after DirecTV’s vice chairman Eddy Hartenstein announced his resignation from TiVo’s board of directors, Hartenstein’s direct broadcast satellite company said it has sold its stake in the digital video recorder (DVR) company.

DirecTV sold all of its 3.5 million TiVo shares. TiVo share prices dropped 14.5 percent by the end of the day to $6.41.

Meanwhile, TiVo told the New York Times and Wall Street Journal on the eve of a media event that it is planning to expand its video recording service with content delivered via high-speed Internet connections. The new proposal would, in effect, make TiVo a competitor to DirecTV and other satellite and cable services.

The TiVo sale follows the sell-off of other non-core assets under the new ownership of News Corp. The DirecTV Group recently sold off the set-top box business of its Hughes Network System unit to Thomson, and on Tuesday the satellite TV firm said it had sold controlling interest in its India-based Hughes Software Systems to Singapore-based Flextronics for approximately $226 million.

Despite the sale, DirecTV said it maintains a strong working relationship with TiVo. Approximately 196,000 new TiVo subscribers out of 264,000 added in the last fiscal quarter were DirecTV customers, and TiVo has a total of about 900,000 DirecTV subscribers using its service.

Although TiVo is under contract to supply DVR technology to DirecTV through 2007, some industry observers have speculated that News Corp. would eventually move to use DVR technology developed under its own NDS subsidiary.

So far DirecTV has not announced any interests in using DVR technology other than TiVo’s.

In leaving the TiVo board, Hartenstein said he was reducing his workload to focus on the demands of the satellite TV company.