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Despite Lapse, Guide Talks Proceed

4/05/1998 8:00 PM Eastern

Talks aimed at repairing the "lapsed"interactive-program-guide venture between the companies that own PrevueInteractive and StarSight continued last week, and both sidessaid they hoped that the deal could be completed.

Barring a resolution, the patent lawsuits between UnitedVideo Satellite Group Inc. and Gemstar International Group Ltd.will head to a trial in U.S. District Court in Tulsa, Okla., May 4. But the possibleventure between the two companies would settle those lawsuits.

UVSG president and chief operating officer Peter C. BoylanIII said last week that the companies have continued "productive discussions,"and he was "cautiously optimistic" that they could agree on the thornyintellectual-property issues that have kept them from closing the deal. Gemstarinvestor-relations spokeswoman Sallie Manson said her company has "not ceaseddiscussions with United Video."

Until the ownership of important guide-related technologiesis settled, Tele-Communications Inc., which controls UVSG, is unwilling to carry throughon a promised 10-year affiliation deal with the venture, aimed at using the guide in itsdigital set-tops.

When it came time to hammer out final details, sourcessaid, Gemstar was unwilling to cede ownership of some technology that TCI insisted must bepart of the venture.

Said Media Group Research Inc. analyst Mark Riely,"Each side is playing hardball with the other. They can't move this forward withother affiliates until TCI signs."

And, observers said, TCI president and chief operatingofficer Leo J. Hindery Jr. won't agree to use the new guide until ownership of the keytechnologies is resolved.

The impasse has also derailed the companies' plans to showcable operators attending the National Show in Atlanta next month a new IPG that wouldcombine the "look and feel" features of Prevue Interactive and StarSight.

They had hoped to demonstrate new versions that would runon General Instrument Corp. and Scientific-Atlanta Inc. analog and digital boxes.

"Most operators are waiting to see things get resolvedwith IPG, just to have one-stop shopping" for advanced set-top guides, Boylan said.

Instead, he added, the two companies are moving aheadindependently on guide improvements that they had developed jointly.

On March 26 -- the same day that UVSG chairman Gary Howardwas touting his company to lenders and analysts attending a TCI conference in Denver --Gemstar disclosed that a deadline set to satisfy closing conditions on the venture hadpassed without satisfaction.

As a result, the agreement announced Jan. 20 had lapsed,and the litigation would continue, it said.

Cable operators welcomed the venture idea, if for no otherreason than to remove the overhanging litigation that threatened to disrupt their guideplans. Guides are considered an integral part of advanced-analog and digital televisionservices, and they have demonstrated an ability to drive buy-rates of pay services.

Time Warner Cable, for example, called the venture a"very positive development," noting that it chose to use manufacturers' nativeguides because of the litigation. "Now, that threat goes away, and we are veryanxious to talk to the joint venture about coming to an agreement whereby we could usetheir guide," said Time Warner spokesman Mike Luftman.

September