Gemstar-TV Guide Announces Fourth Quarter and Full Year 2005 Results

Business Wire, March 8, 2006

LOS ANGELES -- Gemstar-TV Guide International, Inc. (NASDAQ:GMST) today announced that for the year ended December 31, 2005, the Company reported revenues of $604.2 million, compared with 2004 revenues of $676.4 million. Revenues for both periods excluded those from the Company's former SkyMall business, which was sold in late 2005 and is classified as a discontinued operation. Net income for 2005 was $54.8 million, or $0.13 per diluted share, compared with a net loss of $(94.5) million, or $(0.22) per diluted share in 2004.

The Company's net income for 2005 was positively impacted by several factors, among them the $43.2 million pre-tax gain on the sale of SkyMall, the recognition of a $40.4 million income tax benefit from continuing operations, and $15.5 million in net interest income during the year. These gains were partially offset by operating expense increases in both the Publishing and Cable and Satellite segments.

Operating loss for 2005 was $(35.7) million, versus an operating loss of $(104.5) million for 2004. The operating loss in 2004 included a $131.6 million write-off of the remaining goodwill and intangible assets of our magazine business, offset by $19.4 million in Consumer Electronics segment settlements and a $10.1 million favorable lease settlement associated with the Company's discontinued eBook business. The Company did not have comparable settlements or write-offs in 2005.

Rich Battista, Gemstar-TV Guide CEO, commented, "In 2005 we invested in our business and took a significant first step toward revitalizing the TV Guide brand by transforming TV Guide magazine into a more relevant and compelling publication. At the same time, we renewed our commitment to strengthen the company's operations and execution, and to improve our product development efforts to enable us to compete more effectively in a media environment that is constantly evolving and becoming more complex. As we sought to strengthen our businesses and pursue our long-term goals, we sold SkyMall, instituted operational improvements within our CE division and achieved top-line growth at both TV Guide Channel and TVG Network."

Mr. Battista continued, "Finally, 2005 was an important year for the company's strategic planning. As the consumer need for video guidance has expanded beyond simply being informed about what's on and when, we have evolved our guidance mission. Today, consumers need more advanced tools to help them navigate through the complex media landscape. They need help in organizing their choices and maximizing their enjoyment of the diverse entertainment offerings available to them. Our goal is to not only be the leading provider of video guidance across multiple media platforms, but also to enable consumers to enhance their personal entertainment experience through the use of our cross-platform products and services. We believe we have laid a strong foundation on which to advance this goal which will ultimately better serve consumers and build value for our shareholders."

Fourth Quarter 2005 Consolidated Performance

For the fourth quarter ended December 31, 2005, the Company reported revenues of $129.4 million, compared with revenues of $164.8 million in the fourth quarter of 2004. Net income for the three months ended December 31, 2005 was $12.7 million, or $0.03 per diluted share, compared with Net income of $1.6 million, or $0.00 per diluted share, in the fourth quarter of 2004. Operating loss for the fourth quarter of 2005 was $(35.5) million, which included stock compensation, depreciation, and amortization charges of $8.2 million, as compared with an operating loss of $(7.7) million in the fourth quarter of 2004, which included stock compensation, depreciation, and amortization charges of $7.6 million.

For the fourth quarter, the Company reported a loss from continuing operations of $(16.8) million, or $(0.04) per diluted share, compared with a loss of $(3.8) million, or $(0.01) per diluted share, for the same period in 2004.

As mentioned above, the Company sold its SkyMall business on December 1, 2005 and recognized a $43.2 million pre-tax gain on sale in the fourth quarter. As such, the SkyMall Business is classified as discontinued operations in the Company's financial statements. Income from the discontinued operations for the fourth quarter of 2005 was $29.5 million, and as a result contributed $0.07 per diluted share to net income in the fourth quarter.

2005 Highlights

Publishing Segment

--  TV Guide magazine took bold steps and launched a transformation

    The transformation of TV Guide magazine began in October with its
    re-launch as a vibrant full-size publication that is more
    compelling, relevant, and useful to today's television viewers
    than the previous digest product. The new magazine targets a
    younger, more engaged TV enthusiast and includes more feature
    stories, exclusive photos, breaking news, and behind-the-scenes
    information. It also features approximately 40 pages of program
    listings, highlights, and recommendations.

Cable and Satellite Segment

--  TV Guide Channel launched new Red Carpet and original programming

    Advertising revenue for TV Guide Channel increased approximately
    10% year over year. Year-over-year, national ratings were up 10%
    and national primetime ratings in the 18-49 demographic were up
    20% versus 2004. Our top ten highest-rated airings for the year
    averaged a .46 HH rating, up 31% from the average for the top 10
    airings in 2004. Much of the ratings success at the Channel was a
    result of the increased focus on ramping up original programming.

--  TV Guide Interactive signed agreements, reached new digital
    household milestone

    TV Guide's Interactive Program Guide (IPG) business revenue
    increased $21.4 million, or approximately 28%, year over year. In
    2005 and early 2006 the Company signed, or renewed distribution
    agreements with Adelphia, Cequel III, Mediacom, and Cox
    Communications. By year end, 39.4 million digital households
    received either our IPG or another party's IPG provided under a
    patent license from the Company.

--  TVG Network set records in distribution and handle; launched
    interactive wagering platform

    TVG Network (TVG) had another record-setting year in 2005. TVG's
    distribution grew by 40% to approximately 18 million homes. For
    the full year 2005, TVG handle grew by 31% to $397 million. The
    network set records for its one-day handle during coverage of the
    131st Kentucky Derby and the Breeders' Cup World Thoroughbred
    Championships. In the third quarter, TVG processed a record high
    quarterly handle of $119.8 million in wagers. During the year the
    Company also launched the first domestic interactive television
    wagering application with EchoStar Communications Corporation,
    enabling more than 10 million ITV-enabled DISH Network subscribers
    to participate in pari-mutuel wagering using their remote controls
    while watching horse races live.

Consumer Electronics Segment

--  Worldwide Interactive Program Guide agreement signed with
    Scientific-Atlanta

    Ending years of litigation, Gemstar-TV Guide and Scientific
    Atlanta signed agreements which provided cross licenses for
    intellectual property assets and facilitated Interactive Program
    Guide (IPG) development and deployment for both companies.

--  Consumer Electronics IPG incorporations doubled worldwide

    Consumer Electronics (CE) IPG incorporations increased worldwide
    by 198 during 2005, doubling the total number we had at the end of
    2004. By year end, a total of 388 consumer electronics products,
    including digital televisions, DVDs, and DVDRs, incorporated the
    Company's CE IPG.

New Product and Business Development Initiatives

--  Gemstar-TV Guide established cross platform product development
    and technology group

    To further the Company's strategic mission we formed a new,
    cross-platform product development and technology group. This
    group will focus on product innovation for digital platforms and
    on integrating the Company's technology resources across
    businesses. In doing so, this group will enhance existing product
    plans, as well as develop new products and services, to further
    the Company's goal to be the leader in television guidance across
    multiple media platforms.

--  Gemstar-TV Guide expanded focus on emerging platforms

    In 2005, the Company also focused on expanding its products and
    services within emerging platforms. This year TVGuide Online
    shifted its strategic focus toward becoming the definitive TV
    information and guidance destination on the web, providing
    consumers a combination of entertainment news, TV programming,
    celebrity information, localized channel listings, and editorial
    guidance. The Company also launched TV Guide Mobile Entertainment,
    in the fourth quarter of 2005, to focus on distributing TV Guide
    content and technology to mobile video devices, particularly cell
    phones.