Sale could find traditional media companies vying with heavyweights such as Microsoft and Google.
The stock price for Gemstar-TV Guide continues to climb three days after the company announced it has retained UBS and was "seeking strategic alternatives," including a possible sale. Some observers see the stock, which is currently around $6, climbing to $10 in the near future.
Although the company’s publishing arm, consisting of print flagship TV Guide, has improved significantly, enjoying an 18.2 percent jump in ad revenue in the first quarter of 2007 and a $2.6 million increase in newsstand revenue, it remains the softest of the company’s three business groups and expects a loss of $30 million to $35 million in 2007 EBITDA.
However, Gemstar has also developed significant digital resources, including the Guidance Technology and Solutions division, which saw revenue increase 26 percent to $75.5 million in the first quarter. Revenue for the Media Networks group, which includes the TV Guide Network, dropped 2 percent to $47.6 million. Overall the company has $500 million in cash and little debt.
That focus on digital products could be attractive to both new media and traditional media companies. An AP report cites Soleil Research Associates analyst Marla Backer as saying potential bidders could include Microsoft, Google and Yahoo. A CNNMoney.com report says that media or technology companies may prove to be more interested than a private equity buyer since the company’s most attractive asset is intellectual property, rather than the magazine.
Still, the Gemstar-TV Guide experiment will probably be viewed as a loser for News Corp., which paid $3 billion in the 1980s for TV Guide, just before it began its slide.