Few companies in the television industry have fallen as fast and as far as Gemstar-TV Guide International. The fallout has now reached the company’s top two executives.
Henry C. Yuen, Gemstar’s CEO, and Elsie M. Leung, chief financial officer, have announced their resignations. The executives were said to be forced out by Rupert Murdoch, whose News Corporation is Gemstar’s largest shareholder with a 43 percent stake.
Gemstar owns TV Guide magazine and builds technology for the interactive program guides.
Owner of dozens of key patents involving the navigation of digital TV channels, Gemstar was expected to become a dominant pay TV gatekeeper through its program guides. Then the sky fell, causing its nearly $60 a share stock price a year ago to dive to a current low of about $2.59.
Gemstar's star was dimmed by an accounting scandal and a critical legal setback. Last April, the company disclosed that in recent years it had recorded more than $100 million in revenue without actually receiving any money. Then, in June, it lost a major patent case that weakened its market position and undermined its claim to exclusive program guide technology.
At the same time TV Guide magazine struggled in difficult economic times. Last month, Gemstar said it would take a $1.3 billion charge against earnings to account for the magazine's reduced value.
Gemstar’s problems extended to Murdoch’s New Corp., which last spring recorded a $4.2 billion charge, turning what would have been a $236 million quarterly profit into a $4 billion loss. In August, News Corp. said Gemstar's problems had caused it to record a further charge of $1.6 billion.
As part of the exit deal with the two executives, Gemstar will pay Yuen about $22 million and Leung about $7 million. They will exchange about 20 million stock options for about eight million restricted shares and about nine million new options.
Yuen will remain the company's executive chairman. Leung will remain a director through at least next year. Additionally, Yuen will transfer to Gemstar all interactive television patents that he holds personally, and give Gemstar the right to acquire all television-related inventions he may develop over the next seven years.
Jeff Shell, a former News Corporation executive who has been Gemstar's co-president and chief operating officer, will become the new CEO. Paul Haggerty, executive vice president for finance at the News Corporation, will succeed Leung on an interim basis.
For more information check out Gemstar's Web site: www.gemstartvguide.com.
