TiVo's Michael Ramsay, perhaps the man most responsible for introducing commercial-zapping digital video recording to television audiences worldwide, will relinquish his CEO title at the company he co
(The Hollywood Reporter) -- TiVo's Michael Ramsay, perhaps the man most responsible for introducing commercial-zapping digital video recording to television audiences worldwide, will relinquish his CEO title at the company he co-founded eight years ago.
Ramsay said Jan. 12 that he will step down as CEO while remaining chairman of the board, and that the firm Howard Fischer Associates has been retained to search for a successor.
Although a spokeswoman said Ramsay had been discussing this move with the board of directors for about a year, analysts who follow TiVo maintained that the decision was a bit more hasty, brought on by a plunging share price and executive infighting.
TiVo shares, which once traded north of $70, have mostly been in single digits for several months and have lost 28% of their value just this year. They closed Jan. 12 up three cents at $4.23.
Analyst Jimmy Schaeffler of the Carmel Group said that TiVo, while presiding over the best DVR technology in the industry, also has been plagued by "internal conflict." He cites disputes between Ramsay and Marty Yudkovitz, the longtime NBC executive who joined TiVo as its president primarily to strike deals with cable TV companies, which so far have eluded the company.
"The Ramsay side says that TiVo's technology will shine through, and the Yudkovitz side says they need to be more responsible to their shareholders and produce more revenue," Schaeffler said. "The Yudkovitz position prevailed."
Ramsay and chief technology officer Jim Barton, both former executives at Silicon Graphics, started TiVo in 1997. Although the technology for pausing live TV, easily recording shows without videotape and skipping commercials was slow to catch on with consumers, TiVo eventually won legions of rabid fans who proselytized for the product on Web sites and radio call-in shows, mainstreaming the use of "TiVo" as a verb for digital recording.
Now TiVo boasts 2.3 million subscribers, and its success has encouraged plenty of competition. While EchoStar and its Dish satellite TV service, along with every major cable TV company, have developed their own DVRs, DirecTV has been selling TiVo. That partnership has accounted for about two-thirds of TiVo's subscribers, and Wall Street sold off TiVo shares beginning the week of Jan. 3 when DirecTV said they'll begin marketing a DVR from the company NDS Group this year. DirecTV and NDS both are controlled by News Corp.
Although the Carmel Group estimates that DVR households in the United States will explode from 8 million now to 21.1 million by year's end, only about 21% of those households are expected to be TiVo subscribers. There are about 109 million TV households in the United States, according to Nielsen Media Research.
Lately, TiVo has rolled out a plethora of technological upgrades, including TiVoToGo, which allows subscribers to move TV shows to their computers, and Tahiti, a technology that allows for experiencing TiVo without a separate cable box and for accessing Internet content and making purchases via remote control. TiVo also said last year it would partner with Netflix to eventually offer video on demand.
Although such advancements are sure to please the TiVo faithful, Wall Street largely has been indifferent to them. A research note from Friedman, Billings, Ramsey & Co. issued Wednesday, for example, praises the Tahiti strategy but reiterates its "market perform" rating on the stock, citing looming competition from NDS.
Analyst Phillip Swann, president of TVPredictions.com, said that although TiVo's focus on building enhancements into its DVR is admirable, the company has lost sight of the basics.
"Big shareholders got too frustrated. Marty Yudkovitz got too frustrated," said Swann, who predicted late last year that TiVo would seek a new CEO in 2005.
"They need someone who can schmooze with major people in the satellite and cable industries. Mike [Ramsay] doesn't understand the TV world, and he was doing things that made Marty's [Yudkovitz] job harder," Swann said.
"You have a lot of people thinking about getting a DVR, and TiVo is going another direction," he said. "They're doing the Netflix thing, the Tahiti thing, the home-networking thing. They need to focus like a laser beam on DVR."
After Ramsay's announcement Jan. 12, rumors quickly floated that TiVo might be seeking a buyer, but published reports had Ramsay denying such speculation.