(BSNS WIRE) Gemstar-TV Guide International, Inc. Reports Earnings for the Q
Gemstar-TV Guide International, Inc. Reports Earnings for the Quarter Ended
September 30, 2000
Business Editors
PASADENA, Calif.--(BUSINESS WIRE)--Nov. 13, 2000--Gemstar-TV Guide
International, Inc. (Nasdaq:GMST) ("Gemstar-TV Guide" or the
"Company") today reported the results of operations for the quarter
ended September 30, 2000.
On July 12, 2000, Gemstar-TV Guide was formed by the merger of
Gemstar International Group Ltd. ("Gemstar") and TV Guide, Inc. ("TV
Guide"). In order to permit a meaningful comparison with past
performances, the pro forma results are presented for the quarters
ended September 30, 2000 and September 30, 1999 as though Gemstar and
TV Guide had been combined for the periods as of July 1, 2000 and 1999
respectively.
Gemstar-TV Guide has four business sectors: the Technology and
Licensing Sector, the Interactive Platform Sector, the Media and
Services Sector, and the Investments and Holdings Sector.
Technology and Licensing Sector
The Technology and Licensing Sector is responsible for the
development, licensing and protection of intellectual property and
proprietary technology. Revenues in this Sector are composed of
license fees paid by third-party licensees for the Company's
proprietary technologies and patents primarily related to video
recording, interactive program guides and electronic books.
The Company's licensing activities cover multiple industries
including consumer electronics, cable, satellite, Internet appliances,
personal computers, and publications worldwide, with major licensees
such as Microsoft, AOL, AT&T, Thomson multimedia, Sony, Panasonic and
others. Sector operations include research and development, and the
creation, protection and licensing of patents and proprietary
technologies.
For the quarter ended September 30, 2000, pro forma revenues in
the Technology and Licensing Sector were $63.0 million and pro forma
EBITDA was $41.1 million at a margin of 65%. Compared with the pro
forma results for the same quarter last year, revenues increased by
32% and EBITDA increased by 55%. The increase in revenues is primarily
attributed to the continued growth of licensing revenues derived from
the Company's interactive program guide ("IPG") technology.
Interactive Platform Sector
The Interactive Platform Sector owns, operates and derives
recurring revenues from advertising, interactive services, content
sales and e-commerce on the Company's proprietary technologies and
platforms and through revenue sharing under license agreements. Sector
activities include the construction and operation of the
infrastructure for the delivery of services and advertising to the
interactive platforms, media research, and trafficking, tracking and
billing of advertising.
The Company's rapidly growing IPG platform currently is composed
of an estimated 3.5 million televisions incorporating the Gemstar
GUIDE Plus+ (R) IPG and 5 million cable set top boxes incorporating
the TV Guide Interactive(SM) IPG, as well as TVGuide.com with more than
3 million unique visitors per month.
For the quarter ended September 30, 2000, pro forma revenues in
the Interactive Platform Sector were $6.6 million and pro forma
expenses were $19.0 million. Compared with the pro forma results last
year, revenues increased by 728% and expenses increased by 42%. The
pro forma revenues also show a growth of 95% over the prior quarter
ended June 30, 2000.
Media and Services Sector
The Media and Services Sector operates the TV Guide(R) magazines,
with a combined circulation of over 9.8 million, and TV Guide(R)
Channel, with more than 49 million subscribers in more than 2,400
cable systems. The Sector also operates a media sales group
responsible for selling advertising on TV Guide magazines, the TV
Guide channel and the IPG platform. Revenues in this Sector are
principally composed of subscription fees and advertising revenues for
TV Guide magazines and TV Guide Channel.
For the quarter ended September 30, 2000, pro forma revenues in
the Media and Services Sector were $171.8 million, and pro forma
EBITDA was $49.6 million at a margin of 29%. Compared with the pro
forma results last year, EBITDA increased by 12% despite a decline in
revenues of 2%. The decline in revenues is primarily attributed to a
revenue decrease in TV Guide magazines, which continues to experience
a reduction in circulation, partially offset by an increase in
revenues from the TV Guide Channel. The increase in EBITDA is a result
of a decrease in expenses of 7%.
Investments and Holdings Sector
The Investments and Holdings Sector holds investments made in
other entities, and operates a variety of non-core businesses and
startup operations, including an 80% ownership in Superstar/Netlink
Group, a joint venture which markets satellite entertainment
programming to C-band direct-to-home satellite dish owners, and UVTV,
which distributes to cable systems television channels and
"superstations," including WGN (Chicago), KTLA (Los Angeles), WPIX
(New York) and others. Revenues in this Sector are primarily derived
from the Superstar/Netlink Group, and secondarily from UVTV. This
Sector continues to invest in the production, marketing and
distribution of TV Games Network, an interactive gaming service for
the horse racing industry.
For the quarter ended September 30, 2000, pro forma revenues in
the Investments and Holdings Sector were $98.2 million, and pro forma
EBITDA was $20.7 million. Compared with the pro forma combined results
of Gemstar and TV Guide last year, revenues decreased by 17% and
EBITDA increased by 14%.
The decrease in revenues is primarily attributed to the continued
decline in the C-band market for SuperStar, accelerated due to the
process of changing over from an operating model to a multi-year
revenue stream model pursuant to an agreement with DISH/EchoStar. The
increase in EBITDA is primarily due to a decrease in operating
activities associated with the model change.
Consolidated Results
The consolidated pro forma revenues after eliminations for the
quarter ended September 30, 2000 were $337.7 million, and pro forma
EBITDA were $99.0 million. Compared with the pro forma combined
results of Gemstar and TV Guide last year, EBITDA increased by 30%
despite a slight decline in revenues of less than 1%. The pro forma
EBITDA per share is $0.24, based on a pro forma weighted-average basic
share count of 409 million shares. Compared with the pro forma EBITDA
per share of $0.19 same quarter last year based on 406 million share,
EBITDA per share increased by 28.8%. The increase in EBITDA is
primarily attributed to growth in the Technology and Licensing Sector,
the narrowing of losses in the Interactive Platform Sector and margin
improvement in the Media and Services Sector.
"We are extremely pleased with the financial performance of the
various business sectors," said Henry C. Yuen, chairman and CEO of
Gemstar-TV Guide. "We are pleased with the strong year over year
growth in the Technology and Licensing Sector, and we expect continued
growth in this Sector as our IPG technologies are incorporated in or
licensed to an increasing number of televisions, set top boxes,
Internet appliances, PC software and tuner cards both domestically and
internationally.
"We are particularly excited about the performance of the
Interactive Platform Sector, which reported a 95% quarter over quarter
revenues growth, and over 700% year over year growth. We expect this
Sector to continue to experience quarter-to-quarter growth as we
continue to expand our IPG platform both in televisions and set top
boxes, and we target operational breakeven towards the end of 2001,"
said Yuen.
"We believe that both the Media and Services Sector and the
Investments and Holdings Sector performed well. Margin improvement
from more efficient operations generated double-digit EBITDA growth
for both Sectors. While we believe that revenues may continue to
decline due to the nature of the businesses, we plan to further
improve the efficiency of our operations," Yuen added.
On October 16, 2000, the Company announced a long-term agreement
with Motorola for the license of the Company's IPG technology, the
settlement of a number of litigations among the parties and a joint
effort to explore new business opportunities in interactive services
on televisions.
"We are extremely pleased with the opportunity to work together
with Motorola in providing new interactive technologies to the cable
industry," said Yuen. "The agreement, together with our remarkable
progress in signing long-term agreements with MSOs, are evidence of
the increasing acceptance of our IPG technology in the cable
industry."
The Company has a 10-year exclusive agreement with AT&T to supply
IPG to all of its subscribers. On October 31, 2000, the Company
announced that it had signed its 100th long-term agreement with cable
MSOs. Through a combination of long-term license agreements and
short-term service agreements, the Company's TV Guide Interactive IPG
with advertising capability is currently incorporated in 1,400 cable
systems across 48 states and Canada, with customers including AT&T,
Time Warner, Comcast, Cox, Charter, CableVision, Adelphia, Insight and
others. In addition, the Company's GUIDE Plus+ IPG with advertising
capabilities is built into major brand televisions, including RCA,
Proscan, GE, Sony, Zenith, JVS, Philips, Panasonic and others, and has
been shipped to an estimated 3.5 million homes. Advertisers who have
purchased advertisements on the 8.5 million strong Gemstar IPG
platform include ABC, AOL, A&E, Blockbuster Video, CBS, Chevrolet,
Domino's Pizza, ESPN, Ford, Fox, GE, General Motors, History Channel,
Lifetime, RCA, TBS, VH1 and USA Network.
"Our 8.5 million household reach makes us the largest daily
platform for the delivery of graphics and text advertisement in the
United States when compared with any print publication," said Yuen.
"While we are still working towards providing quantitative measures
for the effectiveness of advertising on the Gemstar IPG platform, we
have been very pleased by every qualitative evaluation completed. We
are proud that the Gemstar IPG platform was used to launch ABC's `Who
Wants to be a Millionaire' Show, the new Ford Focus, and Patricia
Cornwell's latest novel The Last Precinct, which took the Number One
Bestseller position on the New York Times Best Sellers List shortly
after its hard cover release."
On October 12, 2000, Gemstar announced its new Gemstar eBook(TM)
devices, to be sold by RCA in leading consumer electronics stores
across the nation this holiday season. A number of best-selling
authors, including Patricia Cornwell, Robert Ludlum, Ken Follett,
James Patterson, Ed McBain and Brad Meltzer agreed to have their new
titles available to Gemstar eBook devices prior to availability in
print, and to grant an exclusivity period against all other electronic
formats. The Gemstar eBook will feature new titles from all major
publishers, including HarperCollins, Penguin-Putnam, Random House,
Simon & Schuster, St. Martin's Press and Time Warner Trade Publishing.
Users can also purchase or subscribe to their favorite periodicals
such as Time, Newsweek, Fortune, Money, Fast Company, The Wall Street
Journal Online, key sections of The New York Times on The Web, The
Washington Post and others and receive delivery automatically ahead of
newsstand or current home delivery.
"We are thrilled with the support we received from the publishing
industry because of the unique ability of our system to protect
content," said Yuen. "As for the consumer, the Gemstar eBook is
designed to replicate and improve the long-cherished reading
experience. A user need not struggle with the PC to bring up the file,
then sit upright to read a novel since the Gemstar eBook turns on
instantly to the last page being read. Nor does the reader have to
squint into a PDA with tiny fonts, as Gemstar eBook has a choice of
monochrome and color screens the sizes of paperbacks and hardcovers
which are easy on the eyes, with a one-touch choice of font sizes. The
backlit feature allows the user to read at night without disturbing
other family members. But the most important feature for an avid
reader is the ability to receive a favorite title instantly and free
of delivery charges, ahead of even the availability of hardcovers in
the bookstores."
"Overall, I am extremely pleased with the business and financial
performance of the combined Company last quarter," said Yuen. "It is
clear that we have started to realize the synergies of the
combination, and are well on our way to building one of the largest
and most-utilized consumer entertainment portals worldwide."
About Gemstar-TV Guide International Inc.
Gemstar-TV Guide International Inc., (NASDAQ: GMST) is a leading
global technology and media company focused on consumer entertainment.
The Company has four major business sectors: the Technology and
Licensing Sector, which is responsible for the development, licensing
and protection of intellectual property and technology; the Company's
technology includes the VCR Plus+(R) system, the interactive program
guide ("IPG") marketed under the GUIDE Plus+(R) and TV Guide
Interactive(SM) brands and the electronic book ("eBook"); the
Interactive Platform Sector, which owns, operates and derives
recurring income from advertising, interactive services, content sales
and e-commerce on the Company's proprietary IPG and eBook platforms;
and the Media and Services Sector, which operates the TV Guide(R)
magazines, TV Guide Channel(SM), and other television media
properties, as well as a media sales group that services all of the
Company's media platforms; and the Investments & Holdings Sector,
which operates a variety of businesses including the startup
Television Games Network. The IPG is built into televisions, VCRs or
is downloaded to set top boxes (cable, satellite, telco, Internet) and
presents a multi-day television program guide on the television screen
from which the consumer can view, select, tune to or record programs.
The eBook is a reading device which can store tens of thousand of
pages, and permits a user to take instant delivery of any book,
magazine or newspaper they purchase over the telephone. The Company's
media properties reach over 100 million U.S. homes on a weekly basis.
The Company's products and services are available in over 60 countries
worldwide.
The Company's services, technology and intellectual property are
licensed to major technology, media and communication companies in the
consumer electronics, Internet, personal computer, satellite, cable
television and telco industries. Licensees and customers include AOL,
AT&T, Cablevision, Charter, Comcast, Cox, DirecTV, Matsushita,
Microsoft, Mitsubishi, Motorola, Philips, Sony, Time Warner, Thomson
Multimedia, Zenith and others. The Company has more than 170 issued
U.S. patents in the general area of audio-visual technologies with
more than 3,000 claims, more than 150 issued foreign patents, and
continues to actively pursue a worldwide intellectual property program
and currently has more than 300 U.S. patent and more than 800 foreign
patent applications pending.
Except for historical information contained here, the matters
discussed in this news release contain forward-looking statements that
involve risks and uncertainties, including the timely availability and
acceptance of new products; the impact of competitive products and
pricing; the management of growth; and the other risks detailed from
time to time in the company's SEC reports, including the report on
Form 10-K for the year ended March 31, 2000.
Note to Editors: Gemstar eBook, Gemstar, GUIDE Plus+, VCR Plus+
and PlusCode are trademarks of Gemstar Development Corp. Other product
names used herein are for identification purposes only and may be
trademarks of their respective companies.
-0-
*T
GEMSTAR-TV GUIDE INTERNATIONAL, INC.
PRO FORMA (1) OPERATING RESULTS BY BUSINESS SECTOR
(in thousands)
Three Months Ended Six Months Ended
September 30, September 30,
2000 1999 2000 1999
---- ---- ---- ----
Technology and
Licensing Sector
Revenues $ 63,033 $ 47,821 $ 122,108 $ 91,184
Expenses 21,961 21,368 43,766 40,601
--------- --------- --------- ---------
EBITDA (2) $ 41,072 $ 26,453 $ 78,342 $ 50,583
========= ========= ========= =========
Interactive
Platform Sector
Revenues $ 6,647 $ 803 $ 10,060 $ 1,458
Expenses 18,972 13,321 35,145 25,016
--------- --------- --------- ---------
EBITDA (2) $ (12,325) $ (12,518) $ (25,085) $ (23,558)
========= ========= ========= =========
Media and Services
Sector
Revenues $ 171,794 $ 174,983 $ 351,037 $ 356,103
Expenses 122,233 130,872 255,839 264,793
--------- --------- --------- ---------
EBITDA (2) $ 49,561 $ 44,111 $ 95,198 $ 91,310
========= ========= ========= =========
Investments and
Holdings Sector
Revenues $ 98,168 $ 118,718 $ 207,436 $ 241,194
Expenses 77,487 100,508 161,339 196,161
--------- --------- --------- ---------
EBITDA (2) $ 20,681 $ 18,210 $ 46,097 $ 45,033
========= ========= ========= =========
Consolidated
(after eliminations)
Revenues $ 337,683 $ 341,023 $ 686,917 $ 688,637
Expenses 238,694 264,767 492,365 525,269
--------- --------- --------- ---------
EBITDA (2) $ 98,989 $ 76,256 $ 194,552 $ 163,368
========= ========= ========= =========
(1) Effective July 12, 2000, the Company's consolidated operating
results include the operating results of TV Guide, Inc. ("TV
Guide"). TV Guide was acquired in a transaction accounted for
as a purchase. The pro forma results are presented as though
Gemstar and TV Guide had been combined for all periods and
exclude merger-related and non-recurring charges.
(2) EBITDA means operating income before stock compensation
expense and depreciation and amortization.
*T
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CONTACT: Gemstar-TV Guide International, Inc.
Elsie Leung or Linda Lloyd da Silva, 626/792-5700
KEYWORD: CALIFORNIA
INDUSTRY KEYWORD: INTERNET ENTERTAINMENT TELEVISION/RADIO
COMPUTER/ELECTRONICS PUBLISHING EARNINGS
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