Shining up Gemstar

New CEO might mean deal for Liberty

The fate of Gemstar-TV Guide could end up playing a starring role in the Rupert & John show, at least according to some on Wall Street.

Gemstar shares saw heavy trading Friday as investors reacted to the news that the company has tapped Fox Entertainment Group business development exec Rich Battista to replace Jeff Shell as its CEO. Fox Entertainment is part of Rupert Murdoch’s News Corp., which has a controlling interest in Gemstar.

Shell — who wouldn’t comment on reports that he’s eyeing a post at Comcast — himself came to Gemstar from Fox Entertainment, where he built up the company’s cable biz. His contract at Gemstar was up in the spring.

Surprise exec reshuffling sparked speculation that Murdoch — who via News Corp. has a 41% stake in Gemstar — might buy up the remaining 59% stake and then use the asset to resolve matters with John Malone’s Liberty Media Group.

Malone set off alarm bells across Murdoch’s empire recently when he upped his stake in News Corp.

Analysts said under such a scenario, Gemstar could be split off with other Liberty Media assets. In any case, they said it would make sense for News Corp. to own Gemstar outright.

Gemstar also announced it has tapped News Corp. exec VP of content Anthea Disney to serve in the newly created position of exec board chair. With the appointment, Lachlan Murdoch has resigned as a Gemstar director.

Company’s shares were up a healthy 8.15% in trading on Nasdaq Friday, closing at $5.84.

Righting ship

Gemstar has had plenty of woes of late, but Battista stressed that Shell made many improvements.

“Jeff and his team have done a fantastic job bringing this company back to stability. My mandate now that we have a solid footing again is to grow the company,” Battista told Daily Variety.

Comcast declined to comment on speculation that it will tap Shell to run its growing stable of networks, including E! Entertainment, the Golf Channel, G4, Outdoor Life Network and four regional sports nets.

On paper, Battista’s experience would seem to make him well suited to lead techcentric Gemstar. As the chief strategist for Fox Family, he said he has focused on the intersection of content and new technologies, and how to turn them into lucrative revenue streams. He’s worked in the TV business for the past 15 years, with about a third of that devoted to Fox Family.

Gemstar’s TV Guide magazine remains a major trouble spot, with a huge write-off for the mag ballooning the company’s net loss in the third quarter. Gemstar took an impairment charge of $131.6 million for its TV Guide assets, turning what would have been a profit into a $98.3 million net loss.

Battista said Anthea Disney will be of particular help, since she’s a seasoned professional in the print magazine biz.

In the third quarter, Gemstar’s revenue was up 6% to $175.1 million, based primarily on gains for its onscreen TV guides.

“This company is the leader in pervasive guidance in all platforms. That’s something that really excited me about coming to the company,” said Battista, adding that he’s assisted in the creation of 10 cable networks over the course of his career.

Battista said the legal woes associated with a federal probe of accounting practices at Gemstar are largely in the past, crediting Shell for navigating the way. Accounting irregularities occurred before Shell joined the company in 2002.

(Denise Martin contributed to this report.)

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