My TIVO upgrade prior to a 20% increase in share price.

1. Rich Tullo
Director of Research
rtullo@albertfried.com
(212) 422 – 7282
January 3, 2011
TIVO; UPGRADE TO BUY FROM MARKET PERFORM ON BUY
UPSIDE POTENTIAL; $12 TARGET UNCHANGED
Price Close $8.77
Thesis
We like TIVO’s long- term growth strategy. By deploying the Company’s OTS enabled set- MCAP 1.01B
top boxes at MSOs, TIVO offers low cost solutions for middle market Pay TV operators.
Near-term subscriber losses are already discounted in TIVO’s valuation in our view. Shares 114.7mm
Key Points: 52 Week High $18.93
• We see exceptional upside in TIVO shares for three reasons. I) We think TIVO’s share price
valuation is interesting with roughly 43% upside to our $12 Price Target , 125% upside to the 52 52 Week Low $6.92
week high and 21% downside to the 52 week low. II) We like TIVO’s recent design wins and
expect a return to growth as distributed subscribers may offset TIVO owned churn in FY2012.
III) In our view, TIVO directly benefits from new FCC regulations and the failure of Google TV
Avg. Vol. 10Dy. 1.637mm
1.0.
• We think TIVO’s graphical user interface (GUI) provides a superior PVR viewing environment Short Interest 14.981mm
as compared to most MSO supplied DVRs. We think TIVO’s ability to integrate Over-the-Top
programming as well as social media is novel and solidifies the TIVO’s standing as the gold
standard in PVR services. We think TIVO’s superior service has resulted strong brand
P/BV 5.5x
recognition and we think the TIVO service can foster customer loyalty for its MSO partners.
• In our view, TIVO is a game changer for the small to mid-sized MSOs as the TIVO service
EV/EBITDA NM
enables mid-tier players to compete with large Pay TV providers and OTS programmers for
subscribers. As more devices invade homes the demand for bandwidth, in our view, will increase PE 2011E 15.9x
exponentially. We predict high end homes will need 1 GB broadband connections within 5 years
to support the Wireless devices, TVs, DVRs, Games Appliances and PC devices infesting U.S.
homes. Thus in our outlook, the CAPEX budgets of MSOs will be focused on providing
ESTIMATES (1)
bandwidth to the home at the expense of services and content which we think benefits TIVO.
• We think the En Banc court decision is critical to TIVO’s share valuation. We expect TIVO to
Revenue (In Millions USD)
prevail but the odds are close (5/4 by our model). Should TIVO prevail, we expect TIVO to earn
a $75 to $200 million settlement from SATS/DISH (NC) TV. In addition to cash, DISH will also FY2010A $189.7
be required to either reach a multi-year agreement with TIVO or cancel PVR service to roughly
10 million subscribers. In our view, an En Banc failure will require TIVO to come to market for
capital as legal and R&D expenses burn through TIVO’s cash balances (roughly $227 million as FY2011E $168.9
of F3Q11) within three years.
• As TIVO is an event driven special situation we also recommend hedging the downside risk. To FY2012E $167.9
be clear, we think TIVO shares could trade in the $5 to $7 range if the En Banc ruling favors
DISH/SATS. Thus we strongly recommend marrying the Feb. $7.00 put options for roughly EPS
$0.20 to any new TIVO long position.
• Risks to Thesis: F1Q11A ($0.13)
• Widespread adoption of competing over-the-top technologies could result in greater organic
•
revenue declines versus our model.
Patent trolls and technology companies such as Microsoft (NC) and DISH/SATS (NC) could
F2Q11A ($0.13)
prevail in IP lawsuits against TIVO.
• Continued economic weakness in the U.S. could weaken discretionary purchases of DVR
F3Q11E ($0.18)
equipment and services.
Price Target:
F4Q11E ($0.30)
While TIVO’s near term revenue and EBITDA prospects remain guarded, we expect a turn around in
TIVO’s prospects in FY2012. We derive our $12 price target by applying a 22x multiple to our $0.55
FY2011E ($0.74)
EPS estimate for FY2012. Our multiple is a slight premium to the market multiple but warranted in
our view owing to our bullish views on the market for over-the-top services. FY2012E $0.55
(1) GAAP EPS, Service and Technology Revenue only
See important notes, disclosures and disclaimers on page 3-5 before making investment decisions.1

2. TIVO and the Post Transition Home
• TV viewers now have more options and we think TIVO’s set-top box
technology enables TV viewers to merge OTS services and MSO programming
content. In our view, TIVO’s PVR aggregates OTS and programming content
thus enabling viewers to customize programming pods comprised of OTS and
network broadcasts.
• We think all media in 2009-2010 completed a secular migration from traditional
analog distribution formats to digital distribution on Broadband and 3G mobile
networks. In our view, the TIVO service has also completed this transition. The
TIVO service was originally developed when terrestrial broadcast was the
dominate TV distribution channel and viewers used TIVO PVRs to record
terrestrial TV broadcasts. As viewers migrated onto Broadband networks, VOD
and MSO supplied DVR service supplanted TIVO boxes. Owing to the
recession in 2008-10 TIVO’s subscriber churn epanded to roughly 2% as
subscribers switched off TIVO boxes to save money.
• In FY11, TIVO signed a number of new deals with MSO’s including RCN,
Suddenlink, Virgin Media (NC), Cox Cable and ONO. TIVO’s new MSO
partners have roughly 11 million subscribers and we expect as the new partners
launch the TIVO service the Company’s subscriber losses will decline as MSO
additions replace TIVO owned churn.
• The illustration below highlights the various Broadband demands from multi-
media Internet enabled devices in the home. In our view, the TV screen will
remain the primary method of viewing Scripted TV, Sports and Cinematic
programming owing to picture quality and ability of MSOs to cable content
networks and VOD. In our view, technology like the TIVO PVR enhances MSO
content while offering network subscribers the option of receiving OTS content.
Source: Virgin Media
See important notes, disclosures and disclaimers on page 3-5 before making investment decisions.2

3. Shifting Media Regulations Favor TIVO, In Our View
• We think two regulatory changes at the FCC benefit TIVO and will enable the
company to attract subscribers. I) On 21 December 2010, the FCC approved
new Net Neutrality regulations and we think the rules benefit OTS services
and TIVO in our view is a derivative play on Net Neutrality II) We think the
FCCs continued interest in developing a functional Cable Card Scheme also
benefits PVR suppliers such as TIVO.
• Net Neutrality is a new series of FCC regulations which are designed to
prevent MSO from denying network access to OTS services. Central to Net
Neutrality is the mandate which prevents MSOs from discriminating against
Internet traffic volume created by competing OTS services. In our view, if Net
Neutrality withstands the U.S. judicial review and is not overturned by the
U.S. House of Representatives, then OTS services will compete with MSOs in
providing TV content to the home. Thus we think Net Neutrality enables
unrestricted A LA Carte programming options to be delivered on the MSO’s
Broadband network. Under Net Neutrality, consumers which prefer not to buy
bundle programming packages from MSOs can subscribe to OTS services. We
like TIVO’s prospects under Net Neutrality since MSOs that provide TIVO
PVRs have an OTS monetization vehicle which generates $16 to $20 in total
RPU from content aggregation, advertising data, browsing, social networking
and content search.
• Cable Card (3.0) is a proposed redux of the FCC regulations that require cable
operators to enable set-top boxes to accept a universal signal decoder card.
Similar to a mobile phone Sim Card, the Cable Card decodes the MSO’s
broadcast signal. Cable Card gives consumers the option of buying a cable set-
top box versus leasing proprietary equipment from the MSO and with an
enabled set-top box consumers can change cable service just by swapping
cards. The idea of Cable Card is to increase MSO competition by making
switching easier and to also increase set-top box competition by providing
alternatives to leased set-top boxes. We like TIVO’s position as an
independent provider of set top boxes and we think TIVO will benefit from
Cable Card. We expect TIVO owned churn to decline if Cable Card 3.0
succeeds as retail purchased TIVO boxes will be compatible with every cable
system and switching MSOs does not imply losing the TIVO service.
Source: Virgin Media
See important notes, disclosures and disclaimers on page 3-5 before making investment decisions.3

4. • En Banc: Our theory is the appellate court is now developing criteria on
ordering new patent trials. At issue is the level of design change required to
initiate a new patent infringement trial. If the issue is procedural, we see
multiple scenarios where the U.S. appellate court can rule in TIVO’s favor. We
think the odds of a successful En Banc outcome for TIVO is 5:4 and we model
TIVO will receive a $75 million contempt ruling by F3Q12.
• Should the U.S. En Banc rule against TIVO, we think the shares could trade
lower owing to the lack of operating earnings we model in FY2012. However,
we think Institutional investors should establish positions in TIVO shares prior
to the court’s ruling; which could be in TIVO’s favor; $300 million based on the
prior judgment. We see substantial upside to our Target should the courts rule in
TIVO’s favor as we think the Company will benefit from a new 11 million
subscriber PVR contract with DISH as well as new design wins at MSO’s.
Following a favorable ruling, we also see investors speculating on continued
success in the TIVO suits against AT&T (NC) and Verizon (NC). If TIVO
triumphs versus DISH/SATS the probability that TIVO will succeed in other
suits shifts in TIVO’s favor and a settlement with Verizon and AT&T may be
more likely. Thus it is possible TIVO shares can rally to the 52 High ($18) as
there is a substantial short position in TIVO shares ($15 million) that may cover.
• We think marrying puts to a core TIVO Long Position makes sense. If the Court
rules against TIVO, marrying a $7 FEB. Put limits the TIVO downside to
roughly 23% through February 19, 2010 and investors only give up about 2.3%
of the 36.8% upside to our $12 Target.
TIVO Married Put
120.0%
100.0%
80.0%
60.0%
Gain (Loss)
40.0%
20.0%
0.0%
$5.00 $6.00 $7.00 $8.00 $8.77 $9.00 $10.00 $11.00 $12.00 $13.00 $14.00 $15.00 $16.00 $17.00 $18.00
-20.0%
-40.0%
Share Price on 2/19/2010
Source: Albert Fried and Company LLC.
See important notes, disclosures and disclaimers on page 5-8 before making investment decisions.4

5. TIVO Married Put Model Date Price Price Price Price Price Price Price Price Price Price Price Price Price Price Price
Tivo Share PX 19-Feb-10 $5.00 $6.00 $7.00 $8.00 $8.77 $9.00 $10.00 $11.00 $12.00 $13.00 $14.00 $15.00 $16.00 $17.00 $18.00
TIVO Share Cost 3-Jan-10 $8.77 $8.77 $8.77 $8.77 $8.77 $8.77 $8.77 $8.77 $8.77 $8.77 $8.77 $8.77 $8.77 $8.77 $8.77
TIVO February $7 Put Cost 3-Jan-10 $0.20 $0.20 $0.20 $0.20 $0.20 $0.20 $0.20 $0.20 $0.20 $0.20 $0.20 $0.20 $0.20 $0.20 $0.20
TIVO February $7 Put Intrinsic Value 19-Feb-10 $1.80 $0.80 ($0.20) ($0.20) ($0.20) ($0.20) ($0.20) ($0.20) ($0.20) ($0.20) ($0.20) ($0.20) ($0.20) ($0.20) ($0.20)
TIVO Cash Equity Profit (Loss) 19-Feb-10 ($3.77) ($2.77) ($1.77) ($0.77) $0.00 $0.23 $1.23 $2.23 $3.23 $4.23 $5.23 $6.23 $7.23 $8.23 $9.23
Net Hedged TIVO P/L 3-Jan-10 ($1.97) ($1.97) ($1.97) ($0.97) ($0.20) $0.03 $1.03 $2.03 $3.03 $4.03 $5.03 $6.03 $7.03 $8.03 $9.03
TIVO Cash Equity HPY 19-Feb-10 -43.0% -31.6% -20.2% -8.8% 0.0% 2.6% 14.0% 25.4% 36.8% 48.2% 59.6% 71.0% 82.4% 93.8% 105.2%
TIVO Hedged HPY 19-Feb-10 -22.5% -22.5% -22.5% -11.1% -2.3% 0.3% 11.7% 23.1% 34.5% 46.0% 57.4% 68.8% 80.2% 91.6% 103.0%
Prices A/O 01-03-2010, Prices exclude transaction costs.
Options trading is not suitable for all investors and may entail risks and uncertainties including the losses in excess of principal.
The table above is provided for hypothetical purposes only and contemplates a number of scenarios which do not constitute an alternative to our stated Rating and Price Target on TIVO shares.
Please refer to Characteristics and Risks of Standardized Options and Supplements for additional information on options and suitability. http://www.cboe.com/resources/intro.aspx
Source: Albert Fried and Company LLC.
See important notes, disclosures and disclaimers on page 5-8 before making investment decisions.5

6. Price Chart
Date July 30, 2009 March 4, 2010 May 24, 2010 Oct. 14, 2010 Jan. 03, 2010
Rating Market Perform Market Perform Market Perform Market Perform BUY
Price $10.42 $10.18 $17.39 $10.40 $8.77
Target $10.00 $16.00 $9.00 $12.00 $12.00
1) Additional Information
Rating Action Initiate Maintain/Reit Maintain/Reit Maintain/Reit Upgrade
Target Action Initiate Raise Lower Raise None
Report Type Trading Desk Trading Desk Trading Desk Research Research
2) Trading desk reports distributed to less than 15 persons are exempt from FINRA rule 2711
See important notes, disclosures and disclaimers on page 5-8 before making investment decisions.6

7. Analyst Certification
I, Richard R Tullo, herby certify (1) that the views expressed in this report accurately reflect my
personal views about any or all of the subject securities or issuers referred to in this report and (2)
no part of my compensation was, is or will be directly or indirectly related to the specific
recommendations or views expressed in this report.
See important notes, disclosures and disclaimers on page 5-8 before making investment decisions.7

8. Research at Albert Fried & Company LLC © Copyright 2010
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