'Clear consequences' for EchoStar
EmptyTiVo CEO Tom Rogers told Wall Street analysts Tuesday that EchoStar could be about three months away from a painful comeuppance for infringing on TiVo's DVR patents.
Speaking at the Bear Stearns 21st annual Media Conference in Palm Beach, Fla., Rogers said EchoStar, run by Charlie Ergen, will "ultimately have to own up to this issue," and he said that the longer it drags on the more it "plays into TiVo's hands."
TiVo successfully sued EchoStar before that company split into two: EchoStar and Dish Network. The judgment, with interest, has probably grown to more than $100 million while an injunction demands that EchoStar disable an estimated 4 million DVRs that its customers use.
TiVo, however, has yet to benefit from the court ruling and a subsequent victory at the appellate level, and Rogers on Tuesday slammed EchoStar for its delay tactics.
The CEO used combative language like "contempt proceeding" and "clear consequences," and he predicted EchoStar will feel the "full impact" of a "far-reaching" injunction.
In an unusual display of frustration, he even complained that Wall Street hasn't yet given credit to TiVo for its legal triumphs over EchoStar, judging from a stock price that is largely unchanged from two years ago.
Rogers said investors shouldn't be distracted by claims from EchoStar that it has deployed a software workaround so that its DVRs no longer infringe TiVo's patents, thus avoiding having to shut down its customers' DVRs.
Rogers said that, after consulting with engineers and lawyers, it is "highly, highly unlikely" that EchoStar has indeed built and deployed such a solution.
"Everything EchoStar has said about this case has turned out not to be the case," he said.
By the time he was done speaking Tuesday, TiVo shares were up more than 10% to $8.27, making it the second largest gainer on The Hollywood Reporter Showbiz 50 stock index.
Rogers focused much of his time on EchoStar because the issue was top of mind for Kunal Madhukar, the Bear Stearns analyst who interviewed the TiVo CEO. Madhukar is one of the more bullish Wall Street analysts, predicting that TiVo shares will rise about 70% this year to $14.
Madhukar also quizzed Rogers on TiVo's waning relationship with DirecTV. But now that DirecTV is controlled by Liberty Media and not News Corp., Rogers said there is a "cleaner, clearer path," though to what he wouldn't say.
He said that because TiVo's high-definition stand-alone boxes work only with cable -- coupled with the fact that Comcast and Cox each have embraced TiVo -- that cable has a de facto exclusive on the most popular DVR brand in the marketplace, to the detriment of satellite TV.
And Rogers said that commercial avoidance, a phenomenon that TiVo has practically turned into an art form, is "a game-over issue for television."
"Our role needs to be: How do we solve for that?" he said, touting TiVo's aggressive rollout of interactive advertising platforms that have yet to contribute much to the company's bottom line.
TiVo last week reported a quarterly net loss of $6.36 million, down from a loss of $19.5 million a year ago.