UPDATE - Gemstar-TV Guide could look to sell assets-CEO
Tuesday November 19, 9:01 pm ET
By Ben Berkowitz
(Adds details throughout, byline)
PASADENA, Calif., Nov 19 (Reuters) - Gemstar-TV Guide International Inc. (NasdaqNM:GMSTE - News) would be willing to sell off some of its peripheral assets if a buyer emerged as it works to rebuild itself and restore investor confidence, the company's chief executive said on Tuesday.
At a meeting of shareholders near the company's Pasadena, California, headquarters, Jeff Shell, an executive sent in by Gemstar's largest shareholder to turn the company around, said sales of both its SkyMall catalog business and its electronic book operation were possible.
Shell, who became Gemstar chief executive this month in a shake-up lead by Rupert Murdoch's News Corp.(Australia:NCP.AX - News),, said the company had a strong base of patented technology and a healthy balance sheet to build from, but needed to better run its flagship magazine and interactive programming services.
"It's been a rough six to 12 months for the company, both corporately and operationally," Shell told the gathering of a few dozen shareholders and employees.
Former chief executive Henry Yuen stepped down after News Corp., which owns more than 40 percent of the company, moved to reorganize Gemstar.
The company had faced a number of key losses in court causing some investors to question its strategy and the logic of the $14-billion deal in which Gemstar bought TV Guide in July 2000.
"Gemstar-TV Guide is a company that never really merged," Shell said.
Gemstar, which filed restated results going back to 2001 last week, is under investigation by the Securities and Exchange Commission because of its accounting practices.
It has also acknowledged a probe by the U.S. Department of Justice over allegedly premature integration of TV Guide.
ASSETS ON BLOCK?
"We need to figure out if that business belongs in Gemstar-TV Guide," Shell said, referring to SkyMall.
In an interview with Reuters after the shareholder meeting, Shell said he would also consider selling the e-book division at the right price, although he said such a deal would be more complicated because of the difficulty in valuing the technology assets involved.
But in the interim the company's primary goal, besides its financial restatement, was to restructure its operations, Shell said.
That will involve a relaunch of TV Guide aimed at stemming the decline in subscriptions to the 50-year-old magazine and boosting advertising sales, he said.
TV Guide Channel, which displays scrolling television listings, will also get a new look next year, Shell said.
Shell said the company's interactive programming guides were still a key growth area but needed a clearer strategy for expanding advertising and its reach to new cable TV operators.
"I think we may have gotten a little bit ahead of ourselves with the advertising," Shell said.
At the conclusion of his remarks, there were few questions from shareholders, though one asked Shell about the company's stock price, which has slid nearly 86 percent this year.
"The reason the stock is where it is is that the business has not been managed appropriately," Shell said.
Shell told Reuters the company would also concentrate less on litigation, having suffered a number of high-profile setbacks this year, but would still pursue cases to defend its intellectual property.
"I don't think we would drop any of the suits we have outstanding," he said, adding that he would be happy to settle some of its outstanding lawsuits such as those pending against digital recorder maker TiVo Inc (NasdaqNM:TIVO - News) and set-top box maker Scientific-Atlanta Inc.(NYSE:SFA - News)
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