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Minyan Mailbag: You're a Gemstar


...dig a little and see if you can find the

"Hey now, you're an all-star
Get your game on, go play.
Hey now, you're a rock star
Get the show on, get paid."


You write great stuff! Do you have any thoughts on the stock performance potential of Gemstar-TV Guide International (GMST)? Is it in your media play for the future thoughts?


Minyan Scott


Thanks for reaching out.

I keep a close eye on this one. To me it has the potential to be a consistent player as the media landscape changes. A friend recently was up for the position as Chief Marketing Officer. He comes from the entertainment world. When he realized that it was much more of a technology play, he backed out as he was less comfortable marketing TV codes and the programs themselves. The reason I say this is most people do not view Gemstar as a serious tech play. I think they're really missing on this and it drives blah sentiment.

What I've always found interesting about Gemstar is the perception versus reality thing. What I mean is that TV Guide has always been viewed as somewhat of a dated stodgy brand. I think that perception carried over very distinctly to Gemstar. The fact is they hold several patents on the technology that enables DVRs, or interactive program guides (IPGs – not to be confused with Interpublic). As far as I know, Gemstar seems to be the leader in this sector. The other two players are Microsoft (MSFT) and Tribune (TRB). Here's an article from 2004 that talks about the IPG sector. I think it's spot on, but a little before its time.

With the penetration of DVR projected somewhere between 10-20% of U.S. households, this is a growth category. I believe it's not dissimilar to the Qualcomm (QCOM) story a few years back with cellular technology. Think about this – cable operators currently project between 20-39% of their subs have digital boxes with rapid growth toward the 50% mark. With this in mind, VOD, DVR and other digital services will become much more commonplace. In the NY area, Cablevision (CVC) is making a strong push for their IO product with VOD and DVR. The knock on effect for a Gemstar I would believe has to be positive.

I'll come back to this one throughout the year as I believe we'll see a lot of movement with digital services through the cable operators, and if it has to do with programming, dig a little and see if you can find the gem…star.
Position in MSFT
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