Macrovision to buy Gemstar-TV

"We think it's a smart combination of businesses," a News Corp spokeswoman said. "We look forward to seeing how it performs. We will continue to evaluate it."

DOUBLE-DIGIT REVENUE GROWTH

The takeover price represents a 6 percent premium over Gemstar's closing stock price of $5.98 on Thursday and a 24.5 percent premium since Gemstar put itself up for sale in July.

But the $2.8 billion value of the deal compares with Gemstar's market capitalization of about $30 billion in September 2000, when News Corp announced a deal that would make it the largest shareholder. At $6.35 per share, News Corp's stake in Gemstar is worth roughly $1.15 billion.

Macrovision expects the combined company would deliver annual revenue growth of 10 to 15 percent. Executives said on a conference call they expected savings of more than $50 million from the deal.

Commenting on the share slide, Amoroso said on the call that Macrovision's decision was not based on the "immediate first-day market reaction." He said he was confident the deal would represent "enormous value" for stockholders over time.

With the combined entity, consumers would be able to pull up a guide on their TVs or mobile phones and receive personalized information on their favorite TV shows or read movie reviews before purchasing or renting films.

"This will develop over the next three to four years, as the enhanced technology comes in," said Rich Battista, CEO of Gemstar-TV Guide, noting that in that time more consumer electronics devices will have direct Internet connections.

Macrovision Chief Financial Officer James Budge would serve as CFO of the combined company. Battista and Gemstar CFO Bedi Singh would be leaving the organization, the companies said.

Shares of Macrovision fell $6.54 to $19.45 on Nasdaq.

(Additional reporting by Christopher Kaufman and Sinead Carew in New York and Jessica Hall in Philadelphia; Editing by Derek Caney and Gerald E. McCormick)