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Technology Stocks : Gemstar Intl (GMST) -- Ignore unavailable to you. Want to Upgrade?

To: Paul Merriwether who wrote (482)	10/4/1999 4:45:00 PM
From: Jack Jackson	Read Replies (1) \| Respond to of 6516

FOCUS - Gemstar, TV Guide agree to $9.2 billion merger October 4, 1999 04:15 PM Eastern Time (adds byline, updates throughout, PVS PASADENA) By Bob Tourtellotte LOS ANGELES, Calif., Oct 4 (Reuters) - Gemstar International Group Ltd. GMST , maker of electronic guides for television, and TV Guide Inc. TVGIA on Monday agreed to a $9.2 billion merger that positions the one-time rivals for growth in new forms of electronic advertising and commerce. The deal ends six years of legal wrangling between the companies over technology patents for program guides, which offer daily schedules, commercials and highlights of specials or pay-per-view movies on cable and satellite TV. Moreover, it puts two of the emerging industry's titans together as new broadband digital technologies enter households looking to spur two-way communication over TV set. Many industry experts see a day not too many years down the road when TV viewers will use a remote control to download product information via a television and purchase products through direct links to a manufacturer. The program guides would be a tool through which to navigate numerous channels, commercials and electronic commerce sites in this future world of digital TV, much like a browser or portal helps computer users surf the Internet. "The interactive guide becomes the pivotal point for a consumer who sits down in front of their TV," said TV Guide President Pete Boylan. "We think it's a win-win deal enabling us to get on with what we think is a great opportunity." The deal, creating TV Guide International Inc, has the support of each company's principal stockholders, including cable company Liberty Media and media baron Rupert Murdoch's News Corp Ltd. which each own 44 percent of TV Guide. TV Guide International gains the strong brand name behind TV Guide, and its magazine that is read by some 34 million people weekly. TV Guide also operates the TV Guide channel on cable systems reaching some 50 million U.S. households, as well as various online, cable and other guides. TV Guide shareholders will own 45 percent of the merged company's diluted stock, and Henry Yuen, chief executive of Gemstar, will serve as its chairman and chief executive officer, the companies said in a joint statement. Gemstar's program guide is used by satellite and cable TV systems, and its VCR+ programming tool gives TV watchers the ability tape shows using viewer codes that are published in over 1,800 newspapers and program guides around the world. "TV Guide's experience and relationship with program-related advertiser customers will greatly enhance the combined company's vision of creating a rapidly growing advertising and transaction business based on its highly-used electronic program guide platforms," said Yuen. Under the merger plan, TV Guide shareholders will receive .6573 shares of Gemstar common stock for each share of TV Guide Class A & B common stock they currently own. The stock portion of the deal is valued at $8.6 billion, and the new company will assume another $600 million in debt. The exchange ratio is not subject to adjustment, and the merger is expected to close in the second half of 2000, the companies said. TV Guide International is expected to generate annual revenues over $1.5 billion and cash flow, defined as earnings before interest, taxes, depreciation and amortization (EBITDA) of about $400 million. Following the deal's announcement, Gemstar shares plunged 8-7/8 to 74-3/4 in very active trading on the Nasdaq, while TV Guide's class A shares gained 4-7/32 to 45-3/4 on the Nasdaq. GMST TVGIA ((Los Angeles newsdesk, 213-380-2014, fax 213-622-0056)) REUTERS Terms of Use. © 1996-1999 Microsoft Corporation and/or its suppliers. All rights reserved.