For Sale: Gemstar-TV Guide

What You Get: Interactive TV Listings and Revamped Magazine

By Published on .

NEW YORK (AdAge.com) -- Gemstar-TV Guide has put itself in play, making it the latest acquisition bait for everyone from private equity to media conglomerates with cable TV operations. Rupert Murdoch's News Corp. is the largest shareholder, with a 41% stake, and the sale's timing coincides with News Corp.'s $5 billion bid for Dow Jones Co.
TV Guide was remade in October 2005 as a smaller-circulation magazine instead of the traditional listings-obsessed, 9-million-circulation digest it once was.
TV Guide was remade in October 2005 as a smaller-circulation magazine instead of the traditional listings-obsessed, 9-million-circulation digest it once was.

"The company has made significant improvements throughout its businesses and the board is very pleased with the growth and strategic direction under CEO Richard Battista," said Anthea Disney, chairman at Gemstar, which in addition to publishing TV Guide also develops and licenses electronic programming guides. "We are now poised to investigate the range of available strategic alternatives for continuing to build shareholder value."

Interactive listings a draw
That relatively oblique explanation of the move doesn't address more specific possible factors, including the preponderance of private-equity money seeking investments to call home; uncertainty over the future of the media business; the continuing transformation of TV Guide itself, which was remade in October 2005 as a smaller-circulation magazine instead of the traditional listings-obsessed, 9-million-circulation digest. But its interactive TV listings are what will attract the most interest, especially from cable companies and others who could use the listings in set-top boxes.

Exactly which suitors, and in what capacities, might arrive remains to be seen -- and that in turn will affect any eventual price if a deal or deals become reality.

"Private equity could be interested because Gemstar has no debt," said April Horace, analyst at Janco Partners. "People like Microsoft, Google, Time Warner, Comcast -- there's a lot of potential people who could be interested in portions of Gemstar if it were broken up. Then again, Gemstar has been working hard at building those cross-platform initiatives. You could lose that if it were broken up."

Revenue down
UBS Investment Bank is acting as financial adviser to the sale. Gemstar-TV Guide shares, which have been steadily rising for the past 12 months, rose another 66 cents, or nearly 12.4%, in trading this morning.

Revenue at TV Guide magazine fell 5% to $33.7 million in the first quarter of this year as the deliberate reduction in subscribers cut into circulation revenue. Gemstar's overall first quarter revenue totaled $156.7 million, 9% higher than total revenue in first-quarter 2006.

Last November, Gemstar laid off Gemstar laid off 38 people from across departments and offices, including 24 TV Guide staffers and 14 people from the Gemstar data-services group, in a bid to cut costs before 2007 began. One year earlier the company killed Inside TV magazine, its attempt to merge its core editorial competence in TV with the burgeoning celebrity-gossip scene, after only seven months.
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