Content protection firm Macrovision (NSDQ: MVSN) is acquiring Gemstar-TV Guide for $2.8 billion in cash and stock. The companies say there will be opportunities to combine Gemstar’s guide services with Macrovision’s own distribution and delivery technology. The deal calls for Gemstar-TV Guide shareholders to receive $6.35 per share in cash, a 6 percent premium over Thursday’s closing price. The release notes, however, that the offering price represents a 29 percent premium over Gemstar’s share price in July, when it announced it would review strategic alternatives including a possible sale. That decision came with the blessing of News Corp., (NYSE: NWS) a 41 percent owner of the company.

Shareholders may also elect to receive .2548 shares of Macrovision stock; upon completion, Gemstar shareholders would hold 47 percent of the combined company. The deal is expected to close in Q208, subject to the typical conditions. Both CEO Rich Battista and CFO Bedi Singh of Gemstar will be leaving the company upon close. Release | Webcast (9:00 AM ET) | Slides

The whole deal is being couched in the language of openness and consumer freedom:  Combining Macrovision’s and Gemstar-TV Guide’s solution portfolios will enable extensive libraries of commercial and personal protected content to be accessible on numerous devices through simple and intuitive guides… Macrovision’s and Gemstar-TV Guide’s strategic objectives have been to build and integrate open technology, content protection and distribution offerings that enable the delivery of digital media to consumers across multiple platforms and channels.

The acquisition fits with Macrovision’s recently announced $82 million purchase of All Media Guide, the collector of music metadata. Management touted the deal as key to its transition towards a “B2B2C” firm, offering consumer services complementary to content delivery.

Gemstar’s business has been struggling for some time, as it’s faced longstanding weakness in its basic listings business. Performance at its Guidance Technology & Solutions recently had a good quarter, largely on patent licensing, and it’s made a number of online content buys, such as jumptheshark.com. In its most recent quarter, revenue at its online properties totaled $3 million, out of $160 million in sales for the quarter.

WSJ: Gemstar merged with TV Guide Inc. in a $14.2 billion deal in 2000. Two years later, Gemstar—under then-Chief Executive Henry Yuen—became embroiled in a scandal when it disclosed that it had recognized $107.6 million in revenue from Scientific Atlanta, which was actually money Gemstar had hoped to eventually collect in a patent suit. In May 2006, Mr. Yuen was ordered to pay more than $22 million for his role in the fraud that led the company to restate more than $225 million in revenue from 2000 to 2002.

There may also be a Dow Jones connection here, with News Corp. as the common denominator. When Gemstar announced it would explore strategic alternatives in July, Forbes noted speculation that News Corp. was the driving force behind the decision as it looked to raise some cash.

In early trading, both stocks are plummeting. Macrovision has lost more than 25 percent of its value, while Gemstar is down 16 percent.

Disclaimer: Macrovision is a sponsor of paidContent.org.

• TVGuide’s Q307 Online Revenues: $3 Million
• Earnings: Gemstar-TV Guide Q3 Revs Rise 7 Percent; Income Cut in Half on Higher Costs
• Earnings: Macrovision Q3 Revs up 32 Percent; Acquiring All Media Guide Holdings for $82 Million
• Gemstar-TV Guide Seeks Alternatives, Including Sale