Well one day after the new “90210” premiered on the WB network, TiVo and DirecTV said they are working on a new HD TV set-top box. The agreement puts TiVo in a position to turn a bigger portion of DirecTV’s 16+ million customers into TiVo subscribers, in a deal that TiVo says will reap more in fees than previous agreements.

Reuters spoke to TiVo CEO Tom Rogers about the deal.

Reuters: This is kind of like getting back together with your first love.
Rogers: I’ve been saying for a long time that with DirecTV’s ownership by Liberty Media, it created a new atmosphere and a new environment. I think the management of DirecTV has always been supportive of TiVo and believes that we can put together a very exciting offering.

Reuters: DirecTV is still going to offer generic DVRs to its subs?
Rogers: We are comfortable with that. We recognize that generic DVRs will continue to exist. The biggest contributors to confusion between what is Tivo and what is “DVR” has been mass distributors themselves and obviously the more deals we do the more people have interest to make sure that there is a DVR offering and then something very different that is TiVo.

Reuters: DirecTV TiVo users don’t pay fees to TiVo directly. Is this deal lucrative for you?
Rogers: It was very a successful arrangement for us. There is a lot of financial upside.

Reuters: You are still in court with EchoStar, the other satellite provider. Do you see a time when you will make a similar deal with them?
Rogers: We kind of have a three-pronged strategy: Our go it alone route, our join ‘em route, which is what you could say this is, and our fight ‘em route, which is what EchoStar is. We are getting to the end of the enforcement stage in our fight with EchoStar. Tomorrow we are back in front of the judge for a hearing (related to an injunction and damages).

Reuters: Is TiVo close to the point when that kind of fighting is over?
Rogers: Three years ago I think the view of TiVo is that it had been totally commoditized, that other DVRs were out there and that TiVo, other than a brand name, didn’t have a meaningful distinction. Over the past year we have regained that mantle of innovation, of pioneer. We continue to lead the way on features and giving people a sense of controlling their own destiny on television consumption. We have a lot of work to do but I think we have made enormous progress.

Reuters: But your subscriber gains have still been flat lately. When is there an upturn?
Rogers: When Comcast begins to kick into full gear, and as the DirecTV product becomes available — we have been dialing back our marketing expense on the standalone front…we think all that will kick in to meaningful subscriber growth.

(Photo: Reuters)

Of course, a lot of that has to do with the disarming candor of founder and Chief Executive Charlie Ergen, whose conference calls tend to avoid the sort of obfuscation and Orwellian double-speak the media and investors have to come expect from C-level executives in corporate America.

Ergen had to be especially blunt today on a day his company announced a loss 0f 25,000 subscribers, which according to Bernstein Research’s Craig Moffett, was its first ever loss of subscribers.

On competition:

 (There are) really competitive offerings in the marketplace, as the biggest being probably the phone companies and FiOS and U-verse, where there are a lot of introductory offers out there that I think they had about close to 350,000 net additions in the second quarter so they’re taking those some from us and some customers from others. Obviously in the Hi-Definition front we haven’t been as competitive as we would have liked in the second quarter, particularly versus DirecTV.

On AT&T ending a joint marketing partnership and calling for the repayment of a $500 million investment:

They contractually were allowed to do that. Our loan from them was at 3 percent interest, probably their (AT&T) CFO looked at that and made a very logical decision to say ‘we can probably do better with that money’. Their operations people probably said that we’re probably in a better position to have flexibility going forward in video, if we want to stay with a satellite partner, it would be better to talk to multiple partners than one and see what the best deal out there is. So we have to be ready as a company.

On on-going litigation between DISH and TiVo which might impact 4 to 6 million DISH subscribers if the satellite company loses:

What we did was we designed around the TiVo patent and patent law encourages people to be innovative and our guys were very innovative and used some very sophisticated algorithms and so fourth to design around the TiVo patent. I believe we’ll prevail but TiVo, we’re going to have conversations with TiVo one way or the other about how we work together, and again, I’m just stubborn. I know this case inside and out. I’ve sat through trials. I’ve sat through the engineering models. I’ve sat and had the best and the brightest explain this to us, and I’m just stubborn. We don’t violate their intellectual property today, and I want to prove that. And so we’re going to go to the September 4th hearing and see who is right and so far, TiVo has been right.

On the management’s role in the subscriber losses:

We really haven’t done as good a job executing for the last year and the second quarter is the first quarter we made progress, and that is kind of the first step, and again it’s all my fault. I really wasn’t on top of this business from an operational point of view as well as I should have been but as I got into it and I traveled around and I saw our operations the first thing was we really had to make sure we had the right people in the right place and that was done pretty much in the end of the first quarter … (In the) third quarter we’ll do a better job and fourth quarter we’ll do a better job.

(Photo: Reuters)

At first glance it doesn’t look like it will be a good quarter with these analysts forecasting Comcast, Time Warner Cable and Cablevision to lose around 100,000 basic TV subscribers collectively, while satellite TV plays DIRECTV Group and DISH Network will add around 320,000.

Even more worrisome for cable companies?  AT&T and Verizon added around 410,000 new TV subscribers between them during the quarter.

Yet at least one analyst cautions investors  not to read too much into cable’s basic video subscriber losses as this metric is not as important to growth as the addition of other revenue generating units in particular Internet access and phone.

“It would be missing the point to focus on basic video subscriber adds,” says Chris Marangi, an analyst at Gabelli & Co. which holds shares in Comcast, Time Warner Cable, Cablevision as well as the two satellite TV companies.

“Voice services and high speed data subscribers is what drives revenue growth,” says Marangi.

(Photo: Reuters/Glenn Britt (l), Brian Roberts (r))