There's the stock price, down to $9.83 on May 16 from last midsummer's high of $49.95. There's a delayed ruling in a major lawsuit concerning the patents that are the cornerstone of its interactive program guide business. There was an early April flap over revenue booking that sent shares tumbling. Four top execs just left. There's a major shareholder-Rupert Murdoch's News Corp., which employed Mr. Shell as president-CEO of its Fox Cable Networks Group-that owns 42% of the common stock and that, per Mr. Murdoch's comments in a conference call, exercised a contractual right to install Mr. Shell at Gemstar, and presumably expects him to boost the stock price. (News Corp. last week wrote down $4.2 billion in assets, almost all of which were related to Gemstar's share decline, says a News Corp. spokesman.)
And then there's TV Guide. The magazine's been on a long-term decline. Circulation at the end of 2001 was 9.1 million, down 8.6% from the previous year. At the end of 1998 it was 12.6 million, down from its 14.8 million in 1991. Through April, ad pages are down 19% to 814.8. In the first quarter of `02, the Gemstar segment that contains TV Guide-its largest-had revenue fall 16.7% to $212.8 million, and EBITDA-earnings before interest, taxes, depreciation and amortization-off 28.2% to $50.2 million.
Gemstar does not break out the magazine's revenue, but John Corcoran, most recently an analyst with CIBC World Markets, estimated 2002 revenues at $485 million and EBITDA at $134 million. Which are enviable profit margins, but still down significantly from the corresponding 2001 figures of $561 million and $152 million. In the early `90s, says a former News Corp. executive, the magazine threw off about $200 million EBITDA on revenue of around $750 million.
Gemstar's been "controlling the downward slide very well," Mr. Corcoran says. "But remember, that's what they're doing."
Print buyers say they've heard hints from the company that the title may soon drop rate base again. ("Absolutely untrue," shoots back Shell. "We have no plans to change rate base any time soon.") "It's still a good bulk impression buy," says one high-profile media buyer, adding "But am I surprised there is a rumor the rate base is going to come down? Not at all."
Mr. Shell, unsurprisingly, insists TV Guide is of prime importance to Gemstar. "While we can't say we know where the rate base will settle in long term," he wrote in an e-mail, "We are confident that the print product is as relevant now to the mass market as ever. We may need to make some changes, which we are currently hard at work exploring, but ultimately the hard copy will continue to be the flagship of the brand."
So what are those changes?
"We are absolutely not selling the magazine, and we're not partnering with the magazine," Mr. Shell says. That said, he backpedals somewhat on the option of finding a partner to help publish TV Guide. "If we could find a way to keep control of the elements and find a way to cut our costs," the company would "have to" investigate such an option.
TV Guide is believed to be exiting its distribution arm. A Gemstar spokeswoman says the company "was always looking at ways to maximize efficiency" but could not confirm reports of changes in its distribution structure.
Elsewhere, reports and industry chatter suggest alternate directions for TV Guide. One has the title focusing more on "gadgets" and technology. Another has the magazine becoming a recommendation guide for viewers. In the past the company has floated the idea of transitioning the title to a celeb-heavy, more People-esque format, with a corresponding drop in circulation. (Circulation for Time Inc.'s People is 3.7 million.)
Pressed via e-mail on these options, Mr. Shell responded simply: "Too soon to tell, but stay tuned."