Good Morning Silicon Valley

It can’t be good for the stomach lining to spend months putting together a $2.8 billion deal, proudly announce it and then watch as investors run away screaming. That would account for the telltale pink Pepto rings on the highly polished boardroom table at Macrovision, as the company’s top brass tried to weather the withering reception given their plan to buy Gemstar-TV Guide International. Macrovision makes anti-piracy technology and has aspirations to become a major distributor of protected entertainment content. Gemstar, which has been on the block since July, produces an interactive program guide, and has a TV Guide site, cable network and, of course, magazine.

Sounds like a reasonable pairing, especially in the wake of Macrovision’s earlier $82 million purchase of All Media Guide, a collector of entertainment content metadata. “For the consumer, (this deal) is all about discovery, making it very easy to find stuff (and) to acquire it, doing an automatic download,” said Macrovision Chief Executive Fred Amoroso. So why is Macrovision stock down a whopping 25 percent at the moment (and Gemstar’s off more than 15 percent)? The deal’s getting slammed from both ends — Macrovision investors are worried about the debt load needed for the deal, and many Gemstar shareholders think the price is too low. The latter group does not, however, include Rupert Murdoch, whose News Corp. owns a 41 percent stake in Gemstar and who will bid an unsentimental goodbye to one of his bad bets.