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TiVo files for IPO, teams with Sony

The digital video recording firm kicks its IPO hopes into high gear, setting the price for its initial public offering and announcing a product alliance with Sony Electronics.

Digital video recording firm TiVo kicked its IPO hopes into high gear today, setting the price for its initial public offering and announcing a product alliance with consumer electronics giant Sony Electronics.

TiVo offers "personal video systems," also known as digital video recorders (DVR), and a complementary service that allows television viewers to pause and rewind live television by recording video streams to the device's hard drive. The company's service also allows viewers to customize television schedules and specialized content.

Today, TiVo set a target price for its IPO of $11 to $13 per share, which could raise up to $82.23 million for the company. TiVo has registered to offer more than 6 million shares, according to a filing today with the Securities and Exchange Commission.

Meanwhile, the company announced a strategic partnership with Sony that includes an equity investment from the consumer electronics company and a seat for Sony on TiVo's board. Sony purchased more than 2.6 million shares of stock, priced at $10.41 per share, for a total investment of more than $27.5 million, according to TiVo's SEC filing.

"This is unique and different in many respects, not the least of which is that we are entering an alliance covering the entire spectrum of areas Sony is involved with," said Mike Ramsay, chief executive officer of Tivo.

The investment, which gives Sony an 8.8 percent equity stake in the company before the IPO, makes the consumer electronics firm one of the largest shareholders in the company, along with CEO Ramsay, NBC cable chief Tom Rogers, and DirecTV, which holds an 11 percent stake.

TiVo already has deals with Philips, America Online, and satellite television provider DirecTV, as well as content partnerships with media companies such as NBC, CBS, and Disney.

Instead of a traditional videocassette, recorders like TiVo's use a hard drive like the one found in a desktop computer. The still-nascent market is expected to skyrocket: International Data Corporation projects 300,000 units will ship this year, growing to 10 million shipments in 2004.

In addition to rival Replay, TiVo faces potential competition from Microsoft and its WebTV business, America Online and its upcoming AOL TV initiative, and satellite television providers.

Like Philips, Sony will manufacture TiVo's digital video recorders but also will provide content from Sony Entertainment, including interactive gaming, music, and eventually video-on-demand, the companies said today. Video-on-demand is an enhanced version of pay-per-view that allows subscribers to select movies from a huge film library, paying as they go. The devices, marketed under the Sony brand name, also will carry the TiVo logo.

TiVo's relationship with Sony is nonexclusive, meaning that other companies will continue to manufacture TiVo's devices. However, company executives today would not exclude the possibility that some content created by Sony will eventually be available only on devices manufactured by the company. At the same time, Sony is free to forge alliances with TiVo's competitors, such as Replay TV.

"We talk to a lot of companies all the time about lots of different things and doubtless will continue to do so," a Sony spokesperson said.

Sony does not expect any gaming programming for TiVo to overlap with content developed for its PlayStation gaming console, the company said today.

TiVo has scheduled the retail launch of its devices for this holiday buying season.