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Strategies & Market Trends : Gorilla and King Portfolio Candidates

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To: Mike Buckley who wrote (6194)	9/12/1999 1:41:00 PM
From: NY Stew	Read Replies (2) of 54805

Mike, Jumping off my Citrix bandwagon to my Gemstar bandwagon ... The Bloomberg release (2nd Update) of that article mentioned Gemstar and TV Guide specifically. It is buried somewhere on the Yahoo GMST board and I couldn't find it. This is the observation that deserves the attention IMO: ''Interactive television will turn the media industry inside out, with EPGs touching more Americans than any other media property,' added Bernoff. ''As ITV sweeps across the consumer landscape, it will pull advertising dollars away from existing media, including television and the Web.' Although impressive, the monetary numbers in this article are only for the US market and make no mention of two other revenue streams that Gemstar has in its business model, royalties and subscription fees. In addition to the advertising and e commerce transaction fees this model gives Gemstar flexibility in negotiations and allows for a more predictable cash flow with much upside on the more speculative streams of revenue. For example, Gemstar will receive between $5-10/annum/unit for each AOL TV subscriber as a part of the terms. The current settlement talks with AT&T (TV Guide) are said to be structured similarly to the AOL agreement. The portfolio of IP that Gemstar holds has more reach than most realize. The Smartcard slots being built into more and more consumer devices may someday pay dividends with Gemstars proprietary couponing methodology. Time sensitive discounts are applied to the card for redemption at the consumers convenience. No clipping or mailing is needed. I post little because Gemstar is not ready for consideration but when a few legal issues are resolved it should prove worthy of more discussion. Hindsight may show a parallel to QComm before the Ericsson settlement but that is just more speculation at this time. Regards Stew

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