Friday, December 10, 2004


My recent posts have included comments about Liberty Media (L) building an online TV service--not another cable TV service but an internet TV service-- and posts about consumers buying gadgets from Circuit City and others.

The potential for TV over the internet is huge. I like CC but I also own AMZN and DELL.

The rumor is floating that News Corp or L will buy Gemstar (TV Guide) (GMST). GMST makes most its money nowadays by licensing TV Guides to the cable companies. I have told you about AKEMBO (not sure of spelling) and TIVO. Each will offer internet TV and other media downloads. RNWK with Liberty, plans to offer TV and Radio downloads through a central media server.

This afternoon, I sold my families shares of CC and purchased shares in GMST. This was a quick decision but the rumor makes sense. One can already download the Starz movies of Liberty on the AKEMBO service and the deal has already been made with RNWK. It seems probable that Liberty could use the GMST patents to complete the service.

This is another case of a bubble stock that seems to have made it. GMST sold for about 110 during the bubble. It has traded near $5 for a couple of years. The story may turn out to be rumor only but for speculators, I would recommend GMST well ahead of SIRI.

Granted the buyout is only a speculation but there are major games being played between Liberty and Newscorp. NWS owns 41% of GMST. L will soon own 17% of the voting stock of NWS. It could be that NWS will buy GMST and then trade GMST for L's shares in NWS. The details are not really important because the final outcome is still a guess. My guess is that investors might consider puting a 2% of their portfolio into this speculation.