TiVo Surges on DirecTV Pact

04/12/06 - 08:45 AM EDT

TiVo(TIVO - Cramer's Take - Stockpickr) shares surged Wednesday after the company locked up a three-year extension of a contract with DirecTV(DTV - Cramer's Take - Stockpickr).

The agreement means existing satellite subscribers who use the TiVo digital recorder will continue to receive service and support through DirecTV. The companies also said the extension also includes a clause in which they agreed not to sue each other over patent claims.

DirecTV is in the process of rolling out a DVR device manufactured by NDS(NNDS - Cramer's Take - Stockpickr) (News Corp(NWS - Cramer's Take - Stockpickr) is a major holder of both companies).

In its press release, TiVo said of the contract extension that "recurring monthly economics of the agreement are similar to the economics for DirecTV receivers with TiVo service activated since 2003."

Shares of TiVo rose 69 cents, or 9.2%, to $8.20 in premarket trading.

"We are pleased to have reached an agreement with DirecTV that will allow us to continue to provide our service to the more than 2 million DirectTV TiVo households," TiVo said. "This agreement reflects TiVo's popularity among DirecTV subscribers and importantly respects the value of our intellectual property as well."