Gemstar Sale Could Shake Up IPGs

If Gemstar-TV Guide International Inc. (Nasdaq: GMST) ends up pursuing a sale of the company, the decision could have a significant impact on the market for electronic and interactive program guide services and technology. (See Gemstar Could Seek Sale .)

In addition to supplying cable operators and set-top makers with important interactive programming guide (IPG) and digital video recording software and applications, Gemstar is also a key partner of the GuideWorks LLC joint venture with Comcast Corp. (Nasdaq: CMCSA, CMCSK). Under that deal, formulated in February 2004, Comcast is the majority owner with a 51 percent stake, and Gemstar owns the balance.

Comcast officials were not immediately available for comment Tuesday about the effect a Gemstar sale might have on the GuideWorks joint venture.

Gemstar strengthened its grip on the cable IPG market in March when it inked a deal to acquire Aptiv Digital Inc., a set-top software firm that spun out of Pioneer (USA) Inc. in the summer of 2005.

On the telco front, Gemstar-TV Guide also agreed to license its IPG patents to Verizon Communications Inc. (NYSE: VZ) in support of the service provider's fiber-fed FiOS TV service. (See TV Guide, Verizon Ink Deal.)

In terms of cable IPG competition, Scientific Atlanta is a big player, though one of its largest customers, Time Warner Cable Inc. (NYSE: TWC), has taken most of its set-top guide and navigation work in-house. Digeo Inc. also develops navigation software and applications but has recently embarked on a retail strategy. Hillcrest Labs has generated significant buzz about its next-gen, mouse-like navigation platform, but has yet to announce any cable deals.

On Monday, Gemstar-TV Guide announced that its board had authorized the company to "explore strategic alternatives intended to maximize shareholder value." Those alternatives include a possible sale of the company.

Gemstar did not say whether it would entertain the idea of selling off pieces of its business, which also includes TV Guide magazine, but did stress that the announcement offers no assurance that the exploration of strategic alternatives will result in any transaction.

Gemstar stock jumped on the news, closing Monday at $5.34 per share, up 24 cents, or 4.7 percent. Shares were up 66 cents, or 12.36 percent, to $6 each in early trading Tuesday. News Corp. (NYSE: NWS) owns about 42 percent of Gemstar.

Gemstar said it hired UBS Investment Bank as its financial advisor, and Wachtel Lipton, Rosen & Katz as legal advisor.

— Jeff Baumgartner, Site Editor, Cable Digital News