A combined digital TV decoding and optical recording system includes a transport stream demultiplexer to demultiplex at least one compressed multimedia stream from an MPEG transport stream having multiplexed compressed multimedia streams. A video encoder compresses a video stream to generate a second compressed video stream. A common system controller controls operations of the transport stream demultiplexer and the video encoder, and allocates portions of a memory to the transport stream demultiplexer and the MPEG video encoder based on respective memory requirements.