A modulator takes an a/v input and encodes it so it looks like a standard TV channel (usually 3 or 4). The TiVo has one built-in. The other half - the demodulator - is the TV tuner built in to your TV or VCR.

It's not that coax can't inherently carry stereo but generally devices with built in modulators don't generate a stereo signal. But I just looked and you can get cheap stereo modulators like this one.

-Dylan