• by Joe Mandese  @mp_joemandese, December 10, 2004

Gemstar TV Guide International appears poised to morph once again. And this time, it may be into a business that most people - especially those on Madison Avenue - actually understand: TV programming. Sure, Gemstar already is a "programmer" of sorts. Its TV Guide Channel is among the best-distributed cable networks, and over the past couple of years Gemstar has continued to reinvest in its content. But it would be a stretch to call its content - still mainly scrolling TV listings, interstitials, ads and TV promos - programming in the sense that most media buyers think of it. That could change with the next incarnation of Gemstar, which Friday announced it was replacing its CEO and the chairman of its board. Actually, it feels more like News Corp., Gemstar's biggest shareholder, made the announcement, because the new managers come straight from News Corp.

Rich Battista, who was named to replace Jeff Shell as CEO, was executive vice president-business development and strategy at News Corp.'s Fox Entertainment Group. Anthea Disney, who replaces another News Corp. operative - and progeny - Lachlan Murdoch as chairman of the Gemstar board, is and will continue to serve as executive vice president of content for News Corp. That latter move is an ironic full circle for Disney, who first got involved with News Corp. when she was named editor of TV Guide magazine, which ultimately was spun off to Gemstar in a deal that formed Gemstar TV Guide and gave News Corp.'s Rupert Murdoch and influential stake in the resulting company. That stake, currently more than 40 percent of the equity of Gemstar, could grow, according to some news reports, which are speculating that the management shifts are a prelude to an outright takeover of Gemstar by News Corp. According to a scenario portrayed by Marketwatch, a succession of deals could lead to the break up of Gemstar's assets, with some going to News Corp. and the rest going to Liberty Media Corp., the influential media company controlled by John Malone that has been increasing its own stake in News Corp.

Presumably, a Gemstar takeover and break-up would put the company's content assets - mainly TV Guide magazine and the TV Guide Channel - under News Corp.'s control, with Liberty acquiring Gemstar's interactive programming guides, related patents, and of course, its increasingly irrelevant VCR+ technology. That would make sense because Liberty has always been primarily about distribution and gate keeping, while News Corp. is mainly about content. The only glitch in that scenario is that News Corp. also has begun to step up its gateway role with the acquisition of DirecTV, and its influence over the burgeoning satellite TV and digital video recorder markets.

But the press, and the analysts they quote, at least see the latest management restructuring of Gemstar as a prelude to a News Corp. content play. However, newly anointed Gemstar chief Battista sent a slightly different signal in an interview he gave to the Associated Press, suggesting that the move may be a technology play after all.

"In the last four or five years, I've spent a great deal of time looking at the intersection of content and new technology, such as wireless, VOD [video on demand] and broadband," Battista told the AP, adding, "Working in those areas is going to serve me well at Gemstar-TV Guide. I'm going to take what I consider a great brand and portfolio of assets and build on that."

It's hard to say what all that means, but one thing is clear: the recent history of Gemstar and TV Guide have been anything but clear. Gemstar began as a gizmo that enabled VCR's to easily and seamlessly record TV programs at a push of a button. A VCR for those who may be unacquainted with the device, was a machine some TV viewers would use to record and playback TV shows in the days before TiVo. Okay, so a far bigger percentage of U.S. households have VCRs than DVRs. Big deal. Most of them still cannot easily and seamlessly record TV shows at the push of the button, which is why the technology will ultimately fade, and be replaced by DVRs, video-on-demand and the kind of electronic programming guides (IPG) that are really what the modern day Gemstar is all about.

Gemstar controls the patents for most of the popular IPGs used by cable and satellite operators and the licensing of that technology and the value of those patents are still largely the reason why most shareholders believe Gemstar has a business. Clearly, it's not because of the TV Guide Channel, or TV Guide magazine. While the channel has fabulous distribution, it's essentially a non-starter on Madison Avenue. Its biggest support base are TV programmers themselves, which find the channel an indispensable way of promoting their shows to viewers.

As for TV Guide magazine, once an industry giant, continues to lose circulation, advertising and publishing industry esteem and is sorely in need of an infusion of purpose that is beyond printed TV listings in a digital TV age.

So maybe the team of Battista, a TV technology guru, and Disney, a savvy magazine editor and content developer, are the ideal team to redefine Gemstar in a way that finally has meaning outside Wall Street or the U.S. patent bureau.