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UVSG Dealt Blow in EPG Legal Wars

United Video Satellite Group Inc., heading toward a closing
of its $2 billion acquisition of TV Guide, stumbled last week after a partially
unfavorable ruling in its long-running patent litigation with Gemstar International Group

On Feb. 19, a federal judge ruled that a Gemstar-owned
patent related to interactive electronic-program-guide technology was enforceable. UVSG
wanted the judge to declare the patent unenforceable, based on alleged "inequitable
conduct" when StarSight Telecast Inc. obtained the patent. Gemstar later bought

Other issues have not yet been resolved in the case,
including a claim by UVSG that Gemstar/StarSight's licensing practices violated
antitrust laws, thereby rendering the patent unenforceable.

The Tulsa, Okla.-based federal judge, Sven Erik Holmes,
referred the case to a magistrate and asked the companies to hold a settlement conference
before he makes further rulings.

The minor setback -- which Wall Street analysts said was
not a significant blow to UVSG -- came as UVSG was trying to sell $400 million in
high-yield bonds related to the merger.

UVSG, which will be renamed TV Guide Inc., agreed last
summer to buy News Corp.'s TV Guide assets for $800 million in cash and $1.2 billion
in stock.

Last week, underwriters led by Salomon Smith Barney were
able to sell the TV Guide junk bonds, obtaining a relatively low 8.125 percent interest
rate for the 10-year notes, Wall Street analysts said.

Murray Arenson, an equity analyst at Hoak Breedlove,
Wesneski & Co. in Dallas, said the ruling could have caused trouble with the
bonds' sale. But ultimately, it was "a nonevent," Arenson added.

For one thing, the litigants have had "nine or
10" settlement conferences during the years in which the lawsuit has been pending,
and nothing has come out of them, he said.

The lawsuit does not cover UVSG's current EPG, which
is being deployed in digital-cable boxes, Arenson added. And if Gemstar loses, it can most
likely appeal, he said.

Still, UVSG shares, which are not widely traded, were down
from $34 apiece at the Feb. 8 close to $26.50 last Wednesday, following a $2.13 (7
percent) dip that day.

Gemstar said it was pleased by the decision.

In addition, the company said, the decision will have
"far-ranging implications" because that patent is involved in several other
pending patent-infringement lawsuits, including a case against UVSG and
Tele-Communications Inc., which now owns a controlling stake in UVSG. That control will be
divided between TCI and News Corp. after the TV Guide deal closes.