Gemstar International Group Ltd has begun its defense in earnest against the $2.8bn cash bid by United Video Satellite Group Inc, which was made public last week, with the activation of a poison pill plan and an expanded alliance with Microsoft Corp. Gemstar announced that it had extended an existing relationship agreed in January with Microsoft Corp, which concentrates on the guides found in WebTV Plus and Windows as well as the Gemstar program guides: TV guide Plus and Gold Guide Plus. The two will also co- operate on getting their electronic program guides into advanced set-top boxes in North America. The cable companies have already accepted that they will use Windows CE as one of the operating systems for the next generation of set-tops. Gemstar denies that the timing of the announcement is related to the UVSG bid, although its expanded Microsoft alliance in conjunction with the poison pill, does could have the effect of warning UVSG away from the deal. UVSG is currently a subsidiary of US cable giant Tele Communications Inc, and is attempting to corner the TV program guide market, having just announced a deal with Rupert Murdoch’s News Corp Ltd, buying its TV guide holdings for $2bn. News Corp will get $800m in cash and $1.2bn worth of shares, or a 40% shareholding, in UVSG, while the TCI affiliate companies continue to hold a 44% stake. TCI president Dr John Malone has repeatedly warned of the potential ill-effects of Microsoft dominating the cable industry, and News Corp boss Rupert Murdoch has been wary of a full Microsoft entry into the media world for some time. Gemstar’s poison pill could buy it some time. The company has issued the rights for the holders of every common share to buy one preferred share, essentially making a takeover impossible.
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