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News Corp. Pushing TV Guide Into Era of Interactive Listings

TIMES STAFF WRITER

In an attempt to make TV Guide a powerhouse in the coming age of interactive television, News Corp. is merging its weekly magazine with the dominant over-the-air listing service, the Prevue Channel, in a deal valued at $2 billion.

Under the transaction, News Corp. will get $800 million in cash and $1.2 billion in stock of United Video Satellite Group Inc., the owner of Prevue that is controlled by John Malone’s Tele-Communications Inc., the nation’s largest cable company. News Corp. gets a 40% equity stake in United Video and half of the voting control in the company, which also provides uplink service to Tribune Co.'s WGN superstation and had $507.6 million in revenues last year.

The deal is the latest evidence of growing kinship between Malone and News Corp. Chairman Rupert Murdoch that includes a string of close alliances. News Corp.'s Fox Group and TCI’s Liberty Media programming arm operate a 50-50 sports venture, Fox/Liberty Networks. And TCI rescued Murdoch last year from a costly merger of his satellite television interests with EchoStar Communications Corp. by convincing his cable partners in PrimeStar to buy those assets from News Corp. (The Justice Department has since sued to block the sale.)

For Murdoch, the deal is a way to trade a mature asset for a growth engine better poised to participate in television’s expansion and its possible interactive future. TV Guide has struggled to stay relevant as broadcast and cable channels have multiplied, and some consumers turned to other sources for their local listings.

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“This is a great deal for both parties,” said Christopher Dixon, an analyst at PaineWebber Inc. “TV Guide is in decline because it has no electronic assets, and it leverages United Video into the dominant navigational system.”

For United Video and the Prevue Channel, TV Guide provides a household name that will help international expansion. The partners envision the channel becoming a sophisticated navigational tool as advanced digital set top boxes bring new functions to the TV--such as e-mail, Internet surfing, online banking and shopping, and even video telephone--and as channel choices multiply with the addition of new digital broadcast spectrum.

Though the Prevue Channel appears in 50 million cable households, few consumers consider it a distinct channel, and rather view it simply as a part of their cable service. The partners, which failed three years ago to complete such a merger, aim to enhance the channel using the editorial resources of TV Guide and will change the name to the TV Guide Channel. They envision bringing computer-like searching capabilities to the guide, such as the ability to click on a category such as sports or horror movies to narrow a viewers’ choices.

Such capabilities are already available through advanced digital cable and satellite services.

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The $3-billion purchase of TV Guide and several other magazines from Walter Annenberg--including Seventeen and the Daily Racing Form--by Murdoch in 1988 nearly bankrupted News Corp., which sold off the other titles. News Corp. initially appeared to use TV Guide to promote programs on its Fox network, but curtailed such activities after a storm of criticism.

TV Guide has a circulation of about 13 million, making it the best-selling U.S. weekly and the second-largest consumer magazine in the world behind Reader’s Digest.

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Times wire services contributed to this report.

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