Within five years, the average channel surfer won't have to flip aimlessly from channel to channel or wait for a simple scrolling TV guide to cycle through a hundred listings.
Instead, couch potatoes will have at their fingertips an interactive guide that lists program information according to their tastes: crime dramas at the top of the screen or kickoff times for favorite football games. With a few clicks of a remote-control device, they can also order pizza or merchandise advertised on the guide.
The company poised to control this technology is Pasadena-based Gemstar International Group, which has nearly 100 critical patents for these interactive electronic program guides, or EPGs. Although many companies offer interactive EPGs, Gemstar owns the patents that make the devices work--and that allow them to accommodate services such as movies on demand and one-click shopping.
And if the company completes its pending $9.4-billion purchase of longtime rival TV Guide Inc., Gemstar Chief Executive Henry Yuen would control potentially one of the most valuable media assets ever created. The merger would combine the preeminent EPG patent holder with the company that has branched beyond its popular weekly magazine listing to become the cable industry's biggest supplier of electronic guides.
Competitors say the combined companies will have unrivaled powers over a technology that will be as critical to television viewing in the future as search engines are to the Internet today. As a result, federal regulators are bombarding industry players with questions about the antitrust implications of the deal. They are expected to rule on the Gemstar-TV Guide deal in a matter of weeks and could attach conditions on the merger.
Cable and satellite TV providers, along with a host of television software makers, claim that both companies already use their market dominance unfairly to monopolize not just TV listings but futuristic services such as movies on demand and one-click shopping. Their greatest fear is that together, Gemstar and TV Guide would prevent anyone else from developing or deploying lucrative interactive TV services key to their growth.
"If you put these two companies together . . . anyone else who wants to compete in the electronic program guide market is going to have a very rough time doing it without Gemstar's permission," said Josh Bernoff, an interactive television analyst with Forrester Research in Cambridge, Mass.
