Zacks senior media industry analyst Ann Northrop, CFA keeps her Hold rating on TiVo (TIVO) shares. The following excerpts help tell the story:

TiVo faces increasing competition from cable and satellite providers, which more than three years ago began offering digital video recorder (DVR) service with its digital cable in one set-top box at no upfront costs and comparable monthly subscription rates. Despite superior functionality, TiVo's market share has since shrunk.

Exacerbating the share loss, DirecTV (DTV), which accounts for 2.8 million, or nearly two-thirds of TiVo's subscriber base, began to offer a second competing HD DVR last year, and as a result, TiVo has experienced large subscriber attrition. Its new licensing deals with Comcast (CMCSA) and Cox (CXR) seem very unlikely to fill the subscriber and revenue gap that the loss of DirecTV will leave.

Moreover, TiVo's new pricing plans may slow subscriber losses but will increase sub-acquisition costs, slowing its path to positive EPS. TiVo's new pricing plans that have lower upfront costs and higher subscription rates will increase subscriber acquisition costs (up 39.3% in F1Q08) and therefore make the company's earnings more sensitive to churn. As competition intensifies, we think churn will continue rising, making it more difficult to expand margins and sustain positive earnings momentum.