Gemstar’s Sales Fall but Loss Narrows

Gemstar-TV Guide International Inc., publisher of TV Guide magazine, said Thursday that its second-quarter loss narrowed to $22.5 million as expenses declined. Revenue dropped 13% because of lower circulation at the weekly.

The net loss shrank to 6 cents a share from $886 million, or $2.15, a year earlier, the company said in a filing with the Securities and Exchange Commission. Revenue declined to $226.1 million from $259.3 million at the Los Angeles-based company.

TV Guide’s circulation and advertising sales have fallen over the last two years as Gemstar focused on its other businesses, which develop on-screen program guides for cable TV and sell ads within the guides. Gemstar is the subject of a federal investigation after disclosing that it had overstated revenue in the on-screen guide business.

“TV Guide is just a very mature business, and they don’t have the same kind of growth rates that they had during their prime years,” said Steven Tuen, an analyst at Kenetics Asset Management, before the results were released. Kenetics manages about $300 million, including Gemstar shares.

Gemstar shares rose 6 cents to $4.60 in Nasdaq trading.

Newsstand sales and subscription revenue at TV Guide fell $12.2 million. Total revenue in the publishing segment fell to $107.1 million from $117.1 million a year earlier. Gemstar has said it plans to spend $20 million, primarily in the second half of 2003, on TV Guide marketing and to improve its content and design.

Sales from Gemstar’s satellite-television service dropped $16.4 million, the company said. Gemstar had $600,000 in expenses related to shutting its electronic books unit, EBook.

Gemstar had been expected to report a loss of 4 cents a share on revenue of $225.4 million, the average estimate of analysts surveyed by Thomson First Call.

Rupert Murdoch’s News Corp., Gemstar’s controlling shareholder with a 43% stake, named Jeff Shell chief executive of Gemstar last year, replacing Henry Yuen. Shell is the former head of News Corp.’s Fox cable networks.

Gemstar has said it is cooperating with the SEC’s investigation. The SEC two months ago charged former Gemstar CEO Yuen and former Chief Financial Officer Elsie Leung with fraud.

Attorney Stanley Arkin, representing Yuen and Leung, said at the time that the charges were unfair and arbitrary.

KPMG, Gemstar’s auditor at the time, had supported the accounting that Yuen and Leung used, in which expected future licensing fees from patent disputes were booked as current revenue. When Gemstar lost its patent lawsuits against Scientific-Atlanta Inc. and others, it was forced to restate its revenue.