Comcast

(CMCSA) - Get Report

agreed Tuesday to develop a new digital video recorder with

TiVo

(TIVO) - Get Report

.

Financial terms of the nonexclusive deal weren't disclosed, but news of the agreement sent TiVo rocketing 54% early Tuesday.

The new service will be marketed with the TiVo brand and is expected to be available on Comcast's DVR products in most markets in mid-to-late 2006, the companies said. Comcast said the partnership will provide millions of its customers with "the opportunity to choose the TiVo service, including TiVo's award-winning user interface and features like Season Pass and WishList, as an additional option."

TiVo licenses digital video recording technology to set-top box manufacturers and offers subscriptions to its digital television guide. Comcast is the nation's largest cable television system operator.

The good news comes as a tonic for TiVo, which has suffered a number of setbacks lately, namely the decision of onetime partner

DirecTV

(DTV)

to use a DVR made by a

News Corp.

(NWS) - Get Report

affiliate at the expense of the TiVo service.

As a result, TiVo shares have been hammered over the last year, falling from about $12 to recent levels. Bears on the stock say the TiVo DVR is threatened by competing recorders, particularly those sold by cable and satellite television companies.

Early Tuesday, TiVo surged $2.08 to $5.91, while Comcast added a nickel to $34.04.