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TV Guide Goes Big: Full-Size, Full-Color TV Guide Magazine Reflects Big Changes in TV Landscape

Posted on: Tuesday, 26 July 2005, 06:00 CDT

Gemstar-TV Guide International, Inc. (NASDAQ:GMST).

-- More relevant & vibrant, appealing to a younger, more targeted audience

-- Transformed flagship designed to strengthen Gemstar-TV Guide's TV entertainment and guidance leadership across media platforms

TV Guide magazine will be transformed into a vibrant, full-size, full-color magazine delivering what today's TV viewers are demanding in a dramatically changed TV environment, it was announced today by Rich Battista, chief executive officer of Gemstar-TV Guide International, Inc. (NASDAQ:GMST).

Debuting with the October 17th issue, the new format TV Guide will be larger, easier-to-use, and more entertaining to read - with more breaking news and features, more eye-catching photos, more insights and behind-the-scenes information on viewers' favorite shows and stars, and more reviews and recommendations. The leading weekly television entertainment and guidance magazine, TV Guide will include 100 full-color pages with approximately 40 pages of program listings, highlights and recommendations. The new size, full-color format, and vibrant content also will create an enhanced environment for advertisers.

"We're boldly transforming TV Guide magazine into a weekly full-size, feature-rich TV entertainment and guidance magazine that will better serve the needs of today's readers and advertisers. TV Guide is the most trusted brand in television, and has been an integral, iconic part of American life for more than 50 years. With this transformation, we believe the magazine will be a more relevant and vital part of viewers' lives for years to come," said Mr. Battista.

Mr. Battista continued, "We believe that repositioning our flagship for today's TV audience is important to - and will strengthen - Gemstar-TV Guide's position as the leader in television guidance. The TV Guide brand, which is at the heart of our strategic vision as a consumer-facing company, is built on TV Guide magazine's credibility, access and consumer reach. With an editorially-rich TV Guide as a key 'content engine,' the company will be better able to deliver the television entertainment, news and information that consumers want - however, whenever and wherever they want it. The revitalized TV Guide magazine is the foundation upon which we will build TV Guide into an even more compelling and relevant consumer brand - and the brand is the platform upon which we will strengthen our entire portfolio."

John Loughlin, president of the TV Guide Publishing Group, said, "The new format TV Guide magazine will be totally in sync with today's marketplace and more relevant for our readers and advertisers. We're deepening our relationship with readers by delivering what our research shows they want - a big weekly magazine that is focused on TV shows and characters - and helps them find shows that appeal to their interests and moods. At the same time, we believe the magazine will attract a more diverse group of advertisers, and expect the new full-color, full-size format will be more effective in stimulating newsstand sales."

Current subscribers will continue to receive the digest-sized magazine through the October 9th issue and will receive the new full-sized version starting with the October 17th issue.

The contemporary TV Guide will be published as a full-sized national magazine with:

-- A different content mix - approximately 75% features and 25% listings/highlights compared to approximately 25% features and 75% listings/highlights today.

-- For each day of the week, two pages of reformatted, full-color listings. The current 140 editions will be reduced to one, with either an Eastern or a Pacific time zone designation. TVGuide.com will continue to offer comprehensive local listings.

-- A dramatically shorter editorial cycle, enabling the magazine to be more timely, topical and news-driven.

-- An initial newsstand price of $1.99, compared to today's price of $2.49 for the digest-sized magazine, and an introductory subscription price that is approximately three times today's lowest introductory price of 25(cents). The Company also plans to use promotional pricing to stimulate sampling.

The Business Plan

TV Guide magazine will employ a new circulation strategy and purposefully reduce its total circulation as one element of a fundamentally changed business model. At launch, the company plans to eliminate approximately 3 million sponsored sales, and over time eliminate other circulation that is not economical. The contemporary TV Guide magazine is expected to debut with a minimum paid circulation of approximately 4.5 million. Because its advertiser rate base will be set at 3.2 million, reflecting a circulation level that the magazine expects to sustain over the long term, the contemporary TV Guide magazine will provide a 1.3 million "circulation bonus" to advertisers at launch.

Mr. Loughlin said, "We are confident, based on careful research and evaluation of alternatives, that this plan will put the magazine on a track to achieve profitability over time. The foundation of our new business model is the production of a better, more targeted product with lower unit volume, fewer ad pages, an initially lower cover price and higher production costs per unit -- all designed to yield higher subscription prices, increased newsstand sales, and higher advertising CPMs. Simultaneously, we will decrease our overall cost structure significantly."

Taking into account severance costs, losses associated with the wind-down of the current digest product, and the conversion costs of the new format, the Company projects that TV Guide magazine operations, excluding Inside TV, will incur aggregate operating losses of approximately $90 to $110 million in the 2005 and 2006 fiscal years, due in part to the anticipated costs of new rack acquisitions, consumer marketing and promotion programs. For 2005, the Company expects to incur $55 to $65 million in operating losses from TV Guide magazine. In 2006, operating losses from the contemporary TV Guide magazine are expected to be between $35 and $45 million. The actual amount and timing of these losses will depend upon a number of factors, including the rate of rack acquisition and the level of consumer and advertiser acceptance. The magazine is expected to begin to contribute positively to the Publishing Segment's adjusted EBITDA in approximately three years.

Editor Brings Vision and Strong Track Record

TV Guide magazine's editor-in-chief Ian Birch, hired late last year to revitalize the magazine, has more than 25 years of experience as an editor, writer and publishing executive, having launched or revitalized 12 titles in the U.S. and the U.K., including US magazine, heat, Closer, Elle, Elle Decoration, Red, and Sky. In 2003, Financial Times recognized him in its prestigious "Creative Business 50" of the year.

Birch said, "People are more passionate about their TV viewing than ever before, and they face infinitely more choices. The new format TV Guide magazine will tap into this passion and help them find the shows they'll love. It will be designed around the interests and habits of today's TV viewers, including families, helping them get the most from their TV experience."

He added, "The new TV Guide magazine will be useful, fun, exciting, newsy and glamorous. It will report on our readers' favorites and their guilty pleasures, the blockbuster shows and most compelling characters, and those television moments we all talk about on the train, at the coffee shop, at the hair salon, and at the water cooler."

A recent Penn Schoen & Berland study commissioned by TV Guide shows that:

-- More than 60% of respondents felt that there was not enough news or information about their favorite TV shows and characters in existing media.

-- Nearly 80% want up-to-the-minute, in-depth reporting about their favorite TV shows and characters.

-- And nearly 90% said they would be more interested in reading TV Guide magazine if they knew it offered in-depth reporting on TV shows and characters, plus reviews, recommendations and full color photos.

Recent research studies by Lippincott-Mercer, commissioned by TV Guide, including a test distribution of 50,000 copies sent to current, former, and prospective subscribers, show greater interest in the magazine from younger female readers, higher levels of intent to renew or purchase, and suggest that the new format will have greater newsstand potential than the digest-sized magazine.

New TV Guide Aims to Deliver Highly Attractive Audience to Advertisers

The new TV Guide magazine is positioned to attract an even more diverse base of advertisers - including four significant new categories of advertisers (fashion, automotive, beauty and consumer electronics) - by appealing to a younger, more targeted, and more engaged audience.

Mr. Loughlin said, "We will provide advertisers with a powerful vehicle at a very competitively-priced CPM compared to other major weekly entertainment magazines. And, in combination with the other properties in the Gemstar-TV Guide portfolio, we can offer advertisers creative and integrated advertising opportunities to reach our very desirable audiences."

Gemstar-TV Guide's properties include: TV Guide.com, Inside TV, TV Guide Channel, and TV Guide Spot, as well as TV Guide Interactive and TV Guide On Screen interactive program guides.

The Company's plans for the new format TV Guide magazine include:

-- Decreasing costs significantly. The decrease in circulation will reduce production costs, while the shift from the highly localized, multiple edition digest format to a simplified contemporary format and a national edition will reduce infrastructure costs. The Company also plans a reduction in staff.

-- Increasing the proportion of circulation from newsstand sales, and placing the magazine in new high-volume distribution locations, such as airports and mass transit hubs.

-- Securing approximately 70,000 newsstand pockets at launch, increasing to more than 100,000 by the end of 2006. Overall, the total number of pockets that TV Guide magazine is in today will be reduced; however, the Company expects the magazine's new size to increase the efficiency of each pocket.

With a projected pass-along of nearly five readers per copy, the new format TV Guide magazine is expected to reach more than 20 million readers per week at launch.

Overall Publishing Division Strategy: Inside TV and SkyMall

The new TV Guide is designed to complement the Company's new title, Inside TV, which debuted on newsstands in April. Inside TV is focused on young women ages 18 to 34, while TV Guide is more family-focused, skewing towards women 35 to 54. TV Guide magazine's editorial continues to be driven by the shows, the characters, the celebrities behind the characters and a very strong guidance component. Inside TV is celebrity-driven, reporting on the lives, styles and careers of TV stars, with less emphasis on tune-in information.

Still in its start-up phase, Inside TV's newsstand sales to date have been lower than the Company had expected, due in part to delays in full distribution at certain national retail outlets. Inside TV is currently in approximately 75,000 pockets. The Company continues to expand the number of retail pockets in which the magazine is available, and expects Inside TV to be in a total of approximately 100,000 pockets by year end. The Company anticipates that Inside TV sales will grow to between 300,000 and 400,000 copies per issue by the end of 2005.

As part of its overall evaluation of the strategic direction of its publishing business, the Company is also currently exploring a range of strategic alternatives related to its SkyMall business, including a possible sale. SkyMall has been a positive contributor to the Publishing Segment's financial results in recent periods, but is not central to the Company's overall long-term strategy. There can be no assurances, however, that a sale or any other particular alternative or transaction regarding SkyMall will be pursued or will occur, or on what terms.

Strengthening Gemstar-TV Guide's TV Entertainment and Guidance Leadership.

The revitalized TV Guide magazine will play an important role in strengthening Gemstar-TV Guide's position as a consumer-facing company, with the TV Guide brand at the forefront of that mission.

Said Mr. Battista, "There is no doubt that consumers need television guidance and tools - perhaps more than ever before. In order for Gemstar-TV Guide to capitalize on this opportunity, there are three key steps we must take. First, revitalize the TV Guide brand. Second, propel our TV Guide products and services into 'must have' status with consumers. And third, integrate our content seamlessly across platforms.

"We believe that a newly positioned, content-rich TV Guide magazine will play a significant part in helping us achieve these three goals, and in executing on our overall company vision," Mr. Battista concluded.

About Gemstar-TV Guide International, Inc.

Gemstar-TV Guide International, Inc. (the "Company"), is a leading media and technology company that develops, licenses, markets and distributes technologies, products and services targeted at the television guidance and home entertainment needs of consumers worldwide. The Company's businesses include: television media and publishing properties; interactive program guide services and products; and technology and intellectual property licensing. Additional information about the Company can be found at www.gemstartvguide.com.

Forward-Looking Statements

Except for historical information, the matters contained in this release may contain forward-looking statements that involve risks and uncertainties, including risks and uncertainties related to declines in our magazine publishing business; timely availability and market acceptance of products and services incorporating the Company's technologies and content; our investment in new and existing businesses, including our new magazine and our on-demand network; limitations on our ability to control certain joint venture or partnership businesses; the impact of competitive products and pricing; ongoing and potential future litigation; and the other risks detailed from time to time in the Company's SEC reports, including the most recent reports on Forms 10-K, 10-Q and 8-K, each as it may be amended from time to time. The Company assumes no obligation to update these forward-looking statements.

Source: Business Wire

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