This week’s column is a thought experiment around a Google acquisition of Gemstar-TV Guide. There are some reasons why it wouldn’t work. Then again, Aaron Goldman coincidentally came to the same conclusion in his column a day later. The column continues in the extended entry.

Playing Matchmaker For A Stingray

GOOGLE, I know you’re so busy with everyone offering you a nice
Googlish girl to bring home to Mountain View. Rumors have swirled about matches
with DoubleClick, Omniture, and even little Riya. But Google, have I got a match
for you! She’s a little old for your tastes, but she loves watching television.
I hear you’ve been watching a lot of TV too lately, haven’t you?

I’ve been wondering about Gemstar-TV Guide International as a
potential match for Google since the news broke about TVGuide.com launching its
own video search tool, dubbed Project
, which will index clips and full-length videos from TV, movie, and
entertainment sites, and then use editors to help organize it. This new
incarnation of the TV Guide brand might just be a shot at one more
revenue stream, or it might have something much bigger in mind.

Gemstar, a “global media and technology company,” had a wild ride
during the dot-com boom, with its share price reaching nearly $100 in 2000 (by
comparison, that’s far higher than levels reached by Sun Microsystems and Cisco,
and only slightly lower than Yahoo’s peak); Gemstar has traded at under $5 for
the past two years. Its $1.8 billion market capitalization is a shade lower than
DoubleClick’s reported $2 billion valuation, and right in line with what a
certain company paid for YouTube.   

TV Guide’s brand extends to magazines, a Web site, and interactive
program guides (IPGs). Its main competition on the web is Yahoo TV, which signed
a deal to license Gemstar-TV Guide’s IPGs in September 2006. According to Quantcast
traffic data, TVGuide.com attracts 1.9 million visitors a month (ranked 665 of
all sites) to TV.Yahoo.com’s 3.3 million visitors (ranked 300, if it was its own
site rather than a subdomain). Zap2it attracts nearly 1 million visitors
monthly, ranking 1,536.

Now TVGuide.com aims to cut through the clutter of
consumer-generated media and organize high quality online video. TV Guide will
monetize the searches, but it won’t serve up any video itself. According to
Multichannel News, Project Stingray indexed 72,000 clips as of last week,
compared to Google Video’s index of 26.7 million.   

Looking at the pieces together, you’ve got a media and technology
company that’s expanding its online presence by developing new ways to index and
categorize online video content. If only there was a technology company
continually denying it’s also a media company that’s salivating over online

Why Google Needs Gemstar

Of Gemstar-TV Guide’s $571 million in revenues in 2006, $115
million came from TV Guide Interactive — which licenses its IPGs to cable and
satellite providers — and $107 million came from its Consumer Electronics
business that licenses IPGs to others. This $222 million wouldn’t be a major
revenue stream for Google; the more than $300 million from the TV Guide Channel,
TVG Network, and TV Guide magazine is a bit more enticing.

Yet consider how Gemstar packages its TV Guide Data Solutions: “TV
Guide Data Solutions, the premier provider of television guidance information
data, servicing more that 100 million customers per week in print, on-screen,
through IPG and EPG Guides, as well as online products. We offer comprehensive,
accurate entertainment information to all types of media and business
customers.” That’s a foothold in the television world Google doesn’t have yet.
It brings to mind all the speculation, fueled largely in 2005, that Google or
Yahoo would buy TiVo. John Fortt wrote
a post on Business 2.0’s blog
network in December that Google should buy
TiVo, practically give away the service, and use it to get more mileage out of
both its ad targeting and YouTube.

TiVo, with its narrower business focus, seems like an easier fit
for the Googleplex. Yet Gemstar, with all of $10 million in revenue last year
from TV Guide Online, might be more open to reinventing itself.

Would Google acquire Gemstar-TV Guide? Probably not. Should
Google? Even that’s a maybe. But “TV Guide – powered by Google” does have a nice
ring to it, to the point where it almost feels inevitable.

And Google, really, this one’s special. She won’t go home to just
anyone who makes an offer, unlike some of those others you’ve been spotted
inviting to Mountain View. To get a catch like this, you should be so lucky.

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    April 10, 2007

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