Tivo, AOL Time Warner chat up deal

Series2 allows users to view digital photos, access Net radio

In an effort to attract a wider base of consumers, TiVo, Inc. said Wednesday that it has reached an agreement with AOL Time Warner to offer America Online’s instant messaging and live chat services as part of new models of TiVo digital video recorders.

The new Series2 set-top box will also allow users to view digital photos and access Internet radio.

In a variation of an Internet service once offered by competitor ReplayTV, the agreement between AOL and TiVo also calls for the development of a service that will allow AOL subscribers to set TiVo program recordings by remote while online with AOL.

AOL, which invested $200 million in TiVo two years ago, will pay TiVo a development fee for the new applications. That deal was struck as part of an agreement whereby TiVo will return $48 million of the $200 million that was set aside for potential product development projects and AOL will return 1.6 million shares of Series A redeemable convertible preferred stock to TiVo.

Shares of TiVo, which had dropped below $4 this week from a 52-week high of $12.25, jumped more than 14 percent on the news Wednesday to a session high of $4.48 before closing up 8.87 percent at $4.05.

(Reuters contributed to this report.)