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Print Competition Grows on TV Guide

12/21/2003 7:00 PM Eastern

Although interactive program guides are gaining wide deployments as digital-cable penetration nears 30% nationwide, millions of cable and satellite subscribers still buy some print-guide TV listings from operators and publishers.

Gemstar-TV Guide International Inc. owns both the most widely deployed IPG — TV Guide Interactive — and a passive analog guide channel that claims about 57 million subscribers. Yet TV Guide magazine — which includes editions for cable customers — remains Gemstar's biggest single revenue source.

And just as both the IPG and the analog channel have seen increased competition over the past couple of years, so too has TV Guide lately come under siege. The No. 2 print-guide player, Tribune Media Services, has been capturing some cable customers, helped by a recent changeover at still-dominant TV Guide.

Recent Opening

Gemstar had been publishing a monthly publication for cable operators called The Cable Guide, which TV Guide (before it merged with Gemstar) acquired from former rival TVSM Inc. in 1998.

Earlier this month, Gemstar opted to fold that monthly magazine. It had to convert those monthly customers over to the weekly TV Guide, risk losing the business to Tribune or possibly lose it to operators who'd drop a print guide altogether.

TV Guide says its been successful in converting most of The Cable Guide's 500,000 subscribers to the weekly.
But Tribune has deals with at least half a dozen cable systems to replace The Cable Guide with Tribune's Channel Guide.

"We've had a very good fourth quarter. There are a lot of markets that weren't interested in flipping to the weekly," said Dana Gage, vice president of sales and marketing for Tribune's TV publishing division.

At TV Guide, overall circulation has dropped to 9 million, from 14 million in 1993. That's a concern for Gemstar because the magazine is its biggest revenue generator.

During the third quarter, Gemstar's publishing division generated $102 million in revenue, down from $112 million for the same period in 2002. Revenue at its cable and satellite
segment, which includes TV Guide Interactive guide sales to digital-cable systems, dropped to $82 million during the third quarter, down from $99 million a year earlier.

Comcast Corp.'s San Francisco system earlier this year replaced the TV Guide magazines that it was distributing to subscribers with Tribune's monthly Channel Guide magazine. And in January, Cox Communications Inc.'s New Orleans system and Comcast's Pittsburgh system plan to drop Gemstar's print guides for the monthly Tribune magazines.

Tribune, which has doubled guide distribution to 70 from 35 cable systems over the last five years, expects to pick up an additional 100,000 subscribers at TV Guide's expense in January, a source said.

TV Guide is still doing fine, said senior vice president of national affiliate sales Tonia O'Connor. "They [Tribune] are a strong competitor, but it has not had a material or significant impact on our business, and we feel very confident by our decision to convert our monthly business to weekly," she said.

Operators distribute Tribune's Channel Guide and Cable Connection magazines, and Tribune also publishes the monthly DISH Entertainment magazine for EchoStar Communications Corp.'s Dish Network subscribers. Tribune doesn't disclose the three magazines' circulation because they don't contain ads, Gage said.

Meredith Corp. began publishing a monthly guide for DirecTV Inc. subscribers in August. But industry observers said News Corp. — which owns a 43% stake in Gemstar — could shift DirecTV subscribers to TV Guide sometime after News Corp. completes its acquisition.

TV Guide doesn't break out the number of cable subscribers among the 9 million that get the magazine. Its largest distributors include Time Warner Cable, Comcast and Charter Communications Inc., though those MSOs also distribute Tribune's monthly guides in some systems.

TV Guide is the sole print guide provider for Cablevision Systems Corp. and Adelphia Communications Corp., but O'Connor said those deals aren't exclusive.

Tribune and Gemstar both offer cable operators a cut of monthly subscription revenue.

Both magazines allocate pages for cable operators to use to promote products such as video-on-demand and high-speed data.

Tribune's pitch to cable is that its guides are focused on marketing cable programming and services from cover to cover.

Gemstar executives stress that weekly TV Guide
contains more accurate TV-listings data, as network schedules sometimes change throughout the month.

"The marketplace has changed so drastically with there being so many more programming services out there. It just doesn't fit in a monthly magazine," O'Connor said.

Tom Dunlea, director of marketing for Time Warner Cable in Memphis, Tenn., said he prefers Tribune's monthly guide because he doesn't like the ads for tobacco and other products in TV Guide, and because Tribune, which always touts cable programming on its magazine covers, gives him several pages each month to promote new products.

"The [TV Guide] inside front cover of almost every one of those is a cigar or cigarette ad, and we really don't believe in the editorial comments that have more broadcast than cable [news]," Dunlea said.

About 100,000 of Time Warner's 350,000 subscribers in Memphis pay $2.25 per month to subscribe to Tribune's monthly guide.

Gemstar is investing more in TV Guide Channel and plans to add more original programming to it in 2004. It's also pushing for more distribution. Earlier this month Gemstar cut a carriage deal for TV Guide Channel with DirecTV, which agreed to add the network to its "Total Choice" tier in January.

In October, Bresnan Communications agreed to launch TV Guide Channel on its 11 systems in Colorado, Montana and Wyoming, and Gemstar has renewed a TV Guide Channel distribution agreement with Insight Communications Co.

But the channel has also had some setbacks. Time Warner Cable's 310,000-subscriber Kansas City system dropped TV Guide Channel in October, and its 40,000-subscriber Urban CableWorks partnership in Philadelphia also dropped TV Guide Channel this year.

TV Guide Channel also gained distribution this year from Time Warner Cable systems in Charlotte, N.C., and Jackson, Miss., where it supplanted Tribune's Zap2It.

Tribune's Zap2It channel has Cablevision carriage and is on some Time Warner systems.

Gemstar — under a cable veteran, CEO Jeff Shell — has also had success renewing deals for the TV Guide Interactive IPG.

But while TVGI still dominates the Motorola Inc. cable set-top customer base, competition has picked up on that front — including from Microsoft Corp., which this summer got Comcast and Time Warner to agree to test an IPG designed to run on Motorola DCT-2000 boxes.

In July, Tribune acquired IPG technology from iSurfTV, but hasn't yet sold any IPG product to any cable operators.

Dying Breed?

Distribution of IPGs is growing as digital-cable penetration increases, but Tribune's Gage said she believes demand for print guides won't completely go away.

She said a Horowitz Associates Inc. survey Tribune commissioned in July found 34% of respondents relied on Channel Guide as their primary source of TV listings, compared with 31% that primarily used an IPG.

"I don't want to be completely unrealistic and say that they [IPGs] have had no impact, but as it relates to our base, we've really seen that our core user has remained our core user," Gage said. "They're using the IPG, but they're not deducting print to use it."

Janco Partners analyst April Horace agreed. "Analog didn't go away overnight with the advent of digital cable," he said.

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