FOLIO:'s Top Deals of 2007.
SELLER: Gemstar-TV Guide
PRICE: $2.8 billion (cash and stock)
DATE: December 7
TAKEAWAY: Gemstarâs six month search for a buyer ends with a company that admittedly knows little about publishing magazines, leading to more speculation that TV Guideâs print version will eventually fold.
In the span of 45 minutes in December, a pair of billion-dollar magazine dealsâGemstar-TV Guide to Macrovision, a Santa Clara, California-based digital software solution firm, for $2.8 billion and U.K.-based Emap to Bauer for $2.3 billionâsurfaced, stirring up what had been a relatively quiet few months for magazine M&A.
The Gemstar dealâ56 percent cash and 44 percent stockâis a tricky one to analyze. First, it is pending the approval of Macrovisionâs board. Rupert Murdochâs News Corp., which owns 41 percent of Gemstar, agreed to vote in favor of the deal, but industry sources say the deal is by no means a slam dunk. Wall Street was not impressed,either, as news of the deal sent shares of both companies plummeting. Then, during a conference call the morning of the sale announcement, Macrovision CEO Fred Amorosoâwho will become CEO of the combined company if the sale is approvedâsaid that no decisions had been made about TV Guideâs 3.2 million circulation magazine or its publishing division, and that he would need time to study that part of the company before disclosing his plans for the magazine. âI donât have a deep background in that area,â Amoroso said, not exactly projecting the confidence in the publishing side of the business.
Indeed, Macrovisionâs main interest in Gemstar-TV Guide appears to be data. The company hopes to give customers access to information about television shows and music libraries across a variety of devices and platforms. Projected revenue for 2007 for Gemstar-TV Guide was $631 million, with projected EBITDA of $115 million. Amoroso said he expects the combined company to achieve 10 to15 percent growth in annual revenues over next five years. Whether or not that includes the magazine remains to be seen.
COMMENTS: âMacrovision is interested in programming standards and access, not publishing. I canât see them keeping the magazine."