$2.8 bil buyout rejected; NBC pact announced

HOLLYWOOD — Gemstar Intl. Group has officially rejected the $2.8 billion buyout offer from rival TV program guide developer United Video Satellite Group, which is controlled by cable giant Tele-Communications Inc.

At the same time, Pasadena-based Gemstar announced Thursday a wide-ranging agreement with NBC that promises to bolster Gemstar’s position as an industry leader in the emerging market for interactive TV “navigator” services.

As part of the deal, NBC has taken a 5% equity stake in TDN, a fledgling joint venture of Gemstar and Thomson Consumer Electronics that develops adver-tising and other content for Gemstar’s latest edition of its program guide, “Guide Plus Gold.” In spite of the news, Gemstar’s stock price was unchanged at close of trading Thursday at $42.13.

Not enough cash

In rejecting the unsolicited buyout proposal from United Video, Gemstar said the cash offer “was inadequate from a financial point of view,” meaning that Gemstar sees its near-term profit potential as far beyond the $3 billion range.

Earlier this week, Gemstar fortified itself against the unwanted takeover bid by adopting a “poison pill” defense that will have the effect of flooding the market with new Gemstar shares, making it nearly impossible for United Video to pursue its original $45 per-share offer for Gemstar. Reps for United Video declined comment Thursday. United Video stock was down nearly 3% Thursday to $33.25.

Gemstar’s rebuff of United Video could spark legal action by institutional shareholders such as Viacom, which was on record as supporting the United Video offer. Viacom had no immediate comment on the matter Thursday.

Gemstar’s new deal with the Peacock web calls for NBC to provide news tickers and other data to Gemstar’s “Guide Plus Gold” program guide, which is being incorporated into new TV sets manufactured this year by RCA, Proscan and Sony, among others. NBC also will become a charter advertiser on the guide, and its broadcast affils and cable networks will have “featured placement” in the program listings grid.

Built-in chips

Gemstar’s patented technologies are widely licensed by leading TV, VCR, cable box and direct-to-home satellite dish manufacturers, as well as cable system operators. Data chips built into the TV sets and other receivers read the listings info that is beamed out daily by an ad-hoc network of broadcast stations and cable outlets that Gemstar has contracted.

With the NBC pact, Gemstar’s “Guide Plus Gold” service will have a point-and-click feature that will allow users to access up-to-the minute news and other info beamed out specially for Gemstar by NBC.

Gemstar prexy Henry Yuen sees advertising on the new-model guide as a lucrative and still largely untapped source of revenue for Gemstar as program guides become more widely used in the burgeoning 500-channel TV universe. NBC execs concur.

“This strategic relationship positions NBC, Gemstar and the TDN joint venture to develop and promote a service that we believe will be the most widely distributed interactive television guide in the consumer electronics industry, positioned as the gateway of choice for TV audiences,” said Tom Rogers, prexy of NBC Cable and business development.

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