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Gemstar raises doubts on bid
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July 8, 1998: 11:55 a.m. ET
But United Video dismisses concerns over hostile offer as 'laughable'
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NEW YORK (CNNfn) - Gemstar, it appears, will not be going easily into that good night.
The company, a leading provider of electronic program guide services and creator of the VCR Plus+ home video recording system, said Tuesday it will review the unsolicited $2.8 billion merger bid from United Video Satellite Group but made public a series of concerns casting doubt on the deal's viability.
In discussions with CNNfn Tuesday evening, United Video COO Peter Boylan dismissed Gemstar's concerns as "laughable."
United Video, which is controlled by John Malone's cable giant Tele-Communications Inc. (TCOMA) and Rupert Murdoch, provides program guides and other services to media companies, including the Prevue Channel, an on-screen TV listing that reaches more than 50 million homes.
The company recently agreed to acquire TV Guide from Murdoch's News Corp. for $2 billion.
According to analyst Mark Reilly, president of Media Research Group, Malone and Murdoch view a merger between United Video and Gemstar as critical to the interactive frontier. [141K AIF or 141K WAV]
But they may face a tough battle. Since Gemstar executives control half the board and a large portion of the company's stock, Malone and Murdoch had to propose what Wall Street calls a "bear hug" deal -- cuddly for shareholders but lethal for target management.
Calling the deal into question
In a press release issued Tuesday, Gemstar expressed concern as to whether a merged company, with influence from TCI, would be capable of dealing "neutrally" with cable companies that TCI competes against. It also questioned whether United Video can come up with the needed financing, and whether the bid can win regulatory approval in light of the recent acquisition of TV Guide.
In response, Boylan told CNNfn Tuesday, "United Video has been selling services and products to the cable industry for more than 30 years. Our company has flourished providing products to TCI's competitors. To suggest we don't have neutrality is laughable."
As for financing, Boylan said, "United Video, with [the] sponsorship of TCI and News Corp., would not launch a bid unless financing was certain."
Regulatory concerns are equally misplaced, Boylan suggested, arguing that TV Guide faces stiff competition in the print market from newspaper inserts with TV listings. He pointed out that TV Guide's circulation base has dropped sharply in recent years.
In mid-morning trade, shares of United Video (UVSGA) were down 3/8 to 35-3/8. Gemstar stock (GMSTF) was down 2-1/8 to 41-1/2. 
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