FOLIO:'s Top Deals of 2007.
SELLER: Gemstar-TV Guide
PRICE: $2.8 billion (cash and stock)
DATE: December 7
TAKEAWAY: Gemstarâ€™s six month search for a buyer ends with a company that admittedly knows little about publishing magazines, leading to more speculation that TV Guideâ€™s print version will eventually fold.
In the span of 45 minutes in December, a pair of billion-dollar magazine dealsâ€”Gemstar-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 billionâ€”surfaced, stirring up what had been a relatively quiet few months for magazine M&A.
The Gemstar dealâ€”56 percent cash and 44 percent stockâ€”is a tricky one to analyze. First, it is pending the approval of Macrovisionâ€™s board. Rupert Murdochâ€™s 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 Amorosoâ€”who will become CEO of the combined company if the sale is approvedâ€”said that no decisions had been made about TV Guideâ€™s 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. â€śI donâ€™t have a deep background in that area,â€ť Amoroso said, not exactly projecting the confidence in the publishing side of the business.
Indeed, Macrovisionâ€™s 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: â€śMacrovision is interested in programming standards and access, not publishing. I canâ€™t see them keeping the magazine."