Gemstar Sinks 3Q for News Corp.
By Mike Farrell -- Multichannel News, 5/15/2002 3:30:00 AM
News Corp. took a $4.23 billion fiscal-third-quarter write-down for its Gemstar-TV Guide International Inc. investment -- resulting in a $4 billion loss in the period -- and chairman Rupert Murdoch said he and his executives will keep a close eye on the interactive-programming-guide company in the coming months.
News Corp., which owns a 42.6 percent stake in Gemstar, installed its own executive -- former Fox Cable Networks Group president Jeff Shell -- as co-president and chief operating officer at Gemstar last month.
In a conference call with analysts discussing News Corp.'s fiscal-third-quarter results, Murdoch said he was disappointed in Gemstar's stock performance but he still believes its technology has promise.
'In response, we are taking a much more active role in preserving the value of this powerful asset,' Murdoch added. 'We've appointed one of our outstanding executives, Jeff Shell, to be co-president and chief operating officer of Gemstar. I and other senior members of News Corp. management team are spending a great deal more time with [Gemstar chairman] Henry [Yuen] and Jeff to oversee both operations and external financial reporting of their company. We believe very strongly in the strategic importance of Gemstar.'
Later, on a conference call with reporters, Murdoch said News Corp. has always had the right to appoint the COO of Gemstar.
Gemstar stock has been pounded after questions arose earlier this year about its accounting methods. The company's stock is down 67 percent since the beginning of the year.
Despite the write-down, News Corp. reported a strong quarter, with pro forma revenue up 14 percent and operating income up 49 percent.
Its cable networks -- including Fox News Channel, FX, Speed Channel and Fox Sports Networks -- tripled operating income in the period to $73 million.
News Corp. stock was up $1.60 per share, or 6 percent, to $27.98 in afternoon trading Tuesday.
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