AOL, TiVo restructure set-top deal

America Online and TiVo, a developer of digital recording technology, on Wednesday said they will discontinue the joint production of an interactive television box and restructure the financial terms of their deal. As part of the restructuring, TiVo will return $48 million of AOL's original $200 million investment in the device maker, reached in June 2000. The $48 million was part of an escrow fund set aside for subsidies once the planned AOL-TiVo set-top box hit the market. Also under the restructuring, AOL, a division of media giant AOL Time Warner, will return 1.6 million shares of TiVo stock back to the company. AOL will keep 1.1 million shares of preferred TiVo stock and convert the shares into common stock Sept. 13, according to a filing with the U.S. Securities and Exchange Commission. The companies said their modified relationship will allow TiVo to fold AOL's popular features into its Series2 DVR recording device. TiVo subscribers will be able to use the online company's instant messaging and chat services, and AOL subscribers will be able to program their TiVo devices through the online service. AOL will pay TiVo a $4 million "development fee," according to the SEC filing. --Jim Hu, Special to ZDNet News