SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C. 20549





FORM
10-Q


(Mark
One)


x
            QUARTERLY
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934





For the
quarterly period ended June 30, 2009





or





o
            TRANSITION
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934





For the
transition period from ________ to ________


Commission
file number: 000-53413





Rovi
Corporation


(Exact
name of registrant as specified in its charter)


Delaware
                        26-1739297(State
      or other jurisdiction of incorporation or organization)
                        (I.R.S.
      Employer Identification No.)2830
      De La Cruz Boulevard, Santa Clara, CA
                        95050(Address
      of principal executive offices)
                        (Zip
      Code)





(408)
562-8400


(Registrant’s
telephone number, including area code)





Macrovision
Solutions Corporation


(Former
name, former address and former fiscal year, if changed since last
report)





Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.  Yes  X  No
____





Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding
12 months (or for such shorter period that the registrant was required to submit
and post such files).  Yes ____    No
____





Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, non-accelerated filer, or a smaller reporting
company.  See definitions of “large accelerated filer,” “accelerated
filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act (check
one):





Large
accelerated filerX   Accelerated
filer____  Non-accelerated filer____  Smaller reporting
company___


(Do
not check if a smaller reporting company)


Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange
Act).   Yes  ____  No  X





Indicate
the number of shares outstanding of each of the issuer’s classes of common
stock, as of the latest practicable date.




Class
            Outstanding
      as of July 31, 2009Common
      stock, $0.001 par value
            101,690,087


















ROVI
CORPORATION


FORM
10-Q


INDEX





PART
I - FINANCIAL INFORMATION




Item
      1.
              Unaudited Financial
      Statements
              PageCondensed
      Consolidated Balance Sheets as of June 30, 2009 and December 31,
      2008
              1Condensed
      Consolidated Statements of Operations for the Three and Six Months Ended
      June 30, 2009 and 2008
              2Condensed
      Consolidated Statements of Cash Flows for
      the Six Months Ended June 30, 2009 and 2008
              3Notes to Condensed
      Consolidated Financial Statements
              4Item 2.
              Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations
              21Item 3.
              Quantitative
      and Qualitative Disclosures about Market Risk
              29Item 4.
              Controls
      and Procedures
              31PART
      II - OTHER INFORMATIONItem 1.
              Legal
      Proceedings
              32Item 1A.
              Risk
      Factors
              33Item 2.
              Unregistered
      Sales of Equity Securities and Use of Proceeds
              33Item 3.
              Defaults
      Upon Senior Securities
              33Item 4.
              Submission
      of Matters to a Vote of Security Holders
              33Item 5.
              Other
      Information
              33Item 6.
              Exhibits
              34Signatures
              
              35







PART
I.                               FINANCIAL
INFORMATION


Item
1.                               Financial
Statements





ROVI
CORPORATION AND SUBSIDIARIES


CONDENSED
CONSOLIDATED BALANCE SHEETS


(In
thousands)


(Unaudited)





ASSETS





June 30,
              
              December
  31,2009
              
              2008Current
    assets:Cash and cash
      equivalents
              $           171,977
              
              $          199,188Short-term
      investments
              138,223
              
              77,914Restricted
      cash
              36,793
              
              -Trade accounts
      receivable, net
              87,438
              
              84,020Deferred tax assets,
      net
              44,336
              
              29,537Prepaid expenses and
      other current assets
              10,673
              
              12,053Assets held for
      sale
              -
              
              329,522Total current assets
              489,440
              
              732,234Long-term marketable
      securities
              20,952
              
              84,955Property and equipment,
      net
              39,625
              
              45,352Finite-lived intangible assets,
      net
              817,766
              
              895,071Other
assets
              44,458
              
              50,387Goodwill
              848,219
              
              828,185$        2,260,460
              
              $        2,636,184






LIABILITIES
      AND STOCKHOLDERS’ EQUITY
 
  Current
      liabilities:Accounts payable and
      accrued expenses
                                                    $                 73,382
                                                    
                                                    $             85,686Taxes
      payable
                                                    6,871
                                                    
                                                    8,996Deferred
      revenue
                                                    22,915
                                                    
                                                    14,376Current portion of
      debt and capital lease obligations
                                                    -
                                                    
                                                    5,842Liabilities held for
      sale
                                                    -
                                                    
                                                    56,021Total current liabilities
                                                    103,168
                                                    
                                                    170,921Taxes payable, less current
      portion
                                                    74,970
                                                    
                                                    73,009Deferred tax liability,
      net
                                                    755
                                                    
                                                    9,914Long-term debt and capital lease
      obligations, less current portion
                                                    575,263
                                                    
                                                    855,160Deferred revenue, less current
      portion
                                                    3,865
                                                    
                                                    4,909Other non current
      liabilities
                                                    13,947
                                                    
                                                    7,076771,968
                                                    
                                                    1,120,989Stockholders’
      equity:Common
      stock
                                                    103
                                                    
                                                    103Treasury
      stock
                                                    (25,068)
                                                    
                                                    (25,068)Additional paid-in
      capital
                                                    1,617,702
                                                    
                                                    1,602,667Accumulated other
      comprehensive loss
                                                    (2,960)
                                                    
                                                    (4,879)Accumulated
      deficit
                                                    (101,285)
                                                    
                                                    (57,628)Total stockholders’ equity
                                                    1,488,492
                                                    
                                                    1,515,195$             2,260,460
                                                    
                                                    $         2,636,184
 See the
accompanying notes to the unaudited Condensed Consolidated Financial
Statements.






- 1
-




ROVI
CORPORATION AND SUBSIDIARIES


CONDENSED CONSOLIDATEDSTATEMENTS OF OPERATIONS


(In
thousands, except per share data)


(Unaudited)




Three Months
      Ended
                                                                                                                                                              
                                                                                                                                                              Six Months
      EndedJune 30,
                                                                                                                                                              
                                                                                                                                                              June 30,2009
                                                                                                                                                              
                                                                                                                                                              2008
                                                                                                                                                              
                                                                                                                                                              2009
                                                                                                                                                              
                                                                                                                                                              2008Revenues
                                                                                                                                                              $   119,478
                                                                                                                                                              
                                                                                                                                                              $  
      73,054
                                                                                                                                                              
                                                                                                                                                              $ 
      230,636
                                                                                                                                                              
                                                                                                                                                              $ 
      103,349Costs and
      expenses:Cost of
      revenues
                                                                                                                                                              15,294
                                                                                                                                                              
                                                                                                                                                              12,585
                                                                                                                                                              
                                                                                                                                                              30,464
                                                                                                                                                              
                                                                                                                                                              16,518Research and
      development
                                                                                                                                                              23,009
                                                                                                                                                              
                                                                                                                                                              16,952
                                                                                                                                                              
                                                                                                                                                              46,033
                                                                                                                                                              
                                                                                                                                                              22,025Selling, general and
      administrative
                                                                                                                                                              32,248
                                                                                                                                                              
                                                                                                                                                              30,572
                                                                                                                                                              
                                                                                                                                                              64,379
                                                                                                                                                              
                                                                                                                                                              45,240Depreciation
                                                                                                                                                              4,482
                                                                                                                                                              
                                                                                                                                                              3,653
                                                                                                                                                              
                                                                                                                                                              9,031
                                                                                                                                                              
                                                                                                                                                              4,457Amortization
                                                                                                                                                              20,403
                                                                                                                                                              
                                                                                                                                                              15,033
                                                                                                                                                              
                                                                                                                                                              40,662
                                                                                                                                                              
                                                                                                                                                              18,098Restructuring and
      asset impairment charges
                                                                                                                                                              45,648
                                                                                                                                                              
                                                                                                                                                              -
                                                                                                                                                              
                                                                                                                                                              53,619
                                                                                                                                                              
                                                                                                                                                              -Total costs and
      expenses
                                                                                                                                                              141,084
                                                                                                                                                              
                                                                                                                                                              78,795
                                                                                                                                                              
                                                                                                                                                              244,188
                                                                                                                                                              
                                                                                                                                                              106,338Operating loss from continuing
      operations
                                                                                                                                                              (21,606)
                                                                                                                                                              
                                                                                                                                                              (5,741)
                                                                                                                                                              
                                                                                                                                                              (13,552)
                                                                                                                                                              
                                                                                                                                                              (2,989)Interest
      expense
                                                                                                                                                              (13,589)
                                                                                                                                                              
                                                                                                                                                              (13,424)
                                                                                                                                                              
                                                                                                                                                              (31,167)
                                                                                                                                                              
                                                                                                                                                              (17,442)Interest income and
      other, net
                                                                                                                                                              1,370
                                                                                                                                                              
                                                                                                                                                              2,493
                                                                                                                                                              
                                                                                                                                                              2,825
                                                                                                                                                              
                                                                                                                                                              8,099Gain on sale of
      strategic investments
                                                                                                                                                              -
                                                                                                                                                              
                                                                                                                                                              -
                                                                                                                                                              
                                                                                                                                                              -
                                                                                                                                                              
                                                                                                                                                              5,238Loss from continuing operations
      before income taxes
                                                                                                                                                              (33,825)
                                                                                                                                                              
                                                                                                                                                              (16,672)
                                                                                                                                                              
                                                                                                                                                              (41,894)
                                                                                                                                                              
                                                                                                                                                              (7,094)Income tax
      benefit
                                                                                                                                                              (31,854)
                                                                                                                                                              
                                                                                                                                                              (5,867)
                                                                                                                                                              
                                                                                                                                                              (34,578)
                                                                                                                                                              
                                                                                                                                                              (3,711)Loss from continuing operations,
      net of tax
                                                                                                                                                              (1,971)
                                                                                                                                                              
                                                                                                                                                              (10,805)
                                                                                                                                                              
                                                                                                                                                              (7,316)
                                                                                                                                                              
                                                                                                                                                              (3,383)Discontinued operations, net of
      tax
                                                                                                                                                              (171)
                                                                                                                                                              
                                                                                                                                                              95,458
                                                                                                                                                              
                                                                                                                                                              (36,341)
                                                                                                                                                              
                                                                                                                                                              93,066Net (loss)
      income
                                                                                                                                                              $     (2,142)
                                                                                                                                                              
                                                                                                                                                              $    84,653
                                                                                                                                                              
                                                                                                                                                              $    (43,657)
                                                                                                                                                              
                                                                                                                                                              $     89,683Basic and diluted (loss) income
      per share:Loss per share from
      continuing operations
                                                                                                                                                              $  
          (0.02)
                                                                                                                                                              
                                                                                                                                                              $     (0.13)
                                                                                                                                                              
                                                                                                                                                              $        (0.07)
                                                                                                                                                              
                                                                                                                                                              $      (0.05)(Loss) income per
      share from discontinued operations
                                                                                                                                                              $       (0.00)
                                                                                                                                                              
                                                                                                                                                              $        1.12
                                                                                                                                                              
                                                                                                                                                              $        (0.37)
                                                                                                                                                              
                                                                                                                                                              $         1.35Net (loss) income per
      share
                                                                                                                                                              $       (0.02)
                                                                                                                                                              
                                                                                                                                                              $        0.99
                                                                                                                                                              
                                                                                                                                                              $        (0.44)
                                                                                                                                                              
                                                                                                                                                              $         1.30Shares used in computing basic and
      diluted net (loss) income per share
                                                                                                                                                              100,314
                                                                                                                                                              
                                                                                                                                                              85,165
                                                                                                                                                              
                                                                                                                                                              100,219
                                                                                                                                                              
                                                                                                                                                              68,977
  See the
accompanying notes to the unaudited Condensed Consolidated Financial
Statements.


- 2
-





ROVI
CORPORATION AND SUBSIDIARIES


CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS


(In
thousands)


(Unaudited)




Six Months
      EndedJune
    30,2009
                                                                    2008Cash flows from operating
      activities:Net (loss)
      income
                                                                    $      (43,657)
                                                                    $       89,683Adjustments to reconcile net
      (loss) income to net cash provided by operations:(Income) Loss from
      discontinued operations, net of tax
                                                                    (583)
                                                                    10,860Loss (gain) on
      disposition of discontinued operations
                                                                    3,661
                                                                    (151,284)Depreciation and
      amortization
                                                                    49,693
                                                                    22,555Amortization of note
      issuance costs and FSP APB 14-1 discount
                                                                    11,628
                                                                    5,758Equity-based
      compensation
                                                                    9,694
                                                                    5,044Restructuring
      and asset impairment charge
                                                                    48,872
                                                                    -Deferred
      taxes
                                                                    (20,878)
                                                                    14,147Gain on sale of
      strategic investment
                                                                    -
                                                                    (5,238)Changes in operating assets and
      liabilities, net of assets and liabilities
acquired:Accounts receivable,
      net
                                                                    (2,477)
                                                                    17,882Deferred
      revenue
                                                                    6,988
                                                                    1,160Prepaid expenses,
      other current assets and other assets
                                                                    3,409
                                                                    6,299Income
      taxes
                                                                    (164)
                                                                    19,446Accounts payable,
      accrued expenses, and other long-term liabilities
                                                                    (11,542)
                                                                    (33,992)Net cash provided by operating
      activities of continuing operations
                                                                    54,644
                                                                    2,320Net cash provided by operating
      activities of discontinued operations
                                                                    1,184
                                                                    2,222Net cash provided by operating
      activities
                                                                    55,828
                                                                    4,542Cash flows from investing
      activities:Proceeds from disposition of
      businesses, net of costs to sell
                                                                    266,205
                                                                    184,000Reclass portion of sales proceeds
      from disposition of business to restricted cash
                                                                    (36,782)
                                                                    -Purchases of long and short term
      marketable investments
                                                                    (48,865)
                                                                    (161,759)Sales or maturities of long and
      short term marketable investments
                                                                    53,616
                                                                    363,829Acquisition of Gemstar, net of
      cash acquired
                                                                    -
                                                                    (910,711)Purchases of property and
      equipment
                                                                    (6,868)
                                                                    (2,675)Other acquisitions and
      investing
                                                                    (24,815)
                                                                    (828)Net cash provided by (used in)
      investing activities of continuing operations
                                                                    202,491
                                                                    (528,144)Net cash used in investing
      activities of discontinued operations
                                                                    -
                                                                    (428)Net cash provided by (used in)
      investing activities
                                                                    202,491
                                                                    (528,572)Cash flows from financing
      activities:Principal payments under capital
      lease and debt obligations
                                                                    (342)
                                                                    (935)Debt
    repayments
                                                                    (290,002)
                                                                    -Proceeds from issuance of debt,
      net of issuance costs
                                                                    -
                                                                    615,469Proceeds from exercise of options
      and other financing activities
                                                                    5,342
                                                                    6,641Net cash (used in) provided by
      financing activities of continuing operations
                                                                    (285,002)
                                                                    621,175Net cash used in financing
      activities of discontinued operations
                                                                    (114)
                                                                    (109)Net cash (used in) provided by
      financing activities
                                                                    (285,116)
                                                                    621,066Effect of exchange rate changes on
      cash
                                                                    (414)
                                                                    790Net (decrease) increase in cash
      and cash equivalents
                                                                    (27,211)
                                                                    97,826Cash and cash equivalents at
      beginning of period
                                                                    199,188
                                                                    134,070Cash and cash equivalents at end
      of period
                                                                    $       171,977
                                                                    $      231,896




See the
accompanying notes to the unaudited Condensed Consolidated Financial
Statements.






- 3
-




ROVI
CORPORATION AND SUBSIDIARIES


NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(UNAUDITED)





NOTE
1 – BASIS OF PRESENTATION




On July
15, 2009, Macrovision Solutions Corporation changed its name to Rovi Corporation
(the “Company”).




On May 2,
2008, the Company acquired Gemstar-TV Guide International, Inc. (“Gemstar”) and
on April 30, 2009, the Company acquired substantially all of the operations of
Muze, Inc. (“Muze”).  The Company’s results of operations include the
operations of Gemstar and Muze from those dates forward.





On April 1, 2008, the Company sold its
software and games businesses (referred to as “Software” and “Games”,
respectively).  In November 2008 the Company sold its RightCommerce
(also known as “eMeta”) business.  In December 2008 the Company sold
its TV Guide Magazine business.  In January 2009 the Company sold its
TVG Network business and in February 2009 the Company sold its TV Guide Network
and TV Guide Online businesses.  Together TV Guide Magazine, TVG
Network, TV Guide Network and TV Guide Online are collectively referred to as
the “Media Properties”.  The results of operations andcash flowsof Software, Games, eMeta and the Media
Properties have been classified as discontinued operations for all periods
presented (See Note 3).





The
accompanying unaudited Condensed Consolidated Financial Statements have been
prepared by the Company and its subsidiaries in accordance with the rules and
regulations of the Securities and Exchange Commission.  Certain
information and footnote disclosures, normally included in financial statements
prepared in accordance with accounting principles generally accepted in the
United States of America, have been condensed or omitted in accordance with such
rules and regulations.  However, the Company believes the disclosures
are adequate to make the information not misleading.  In the opinion
of management, the accompanying unaudited Condensed Consolidated Financial
Statements reflect all adjustments, consisting only of normal recurring
adjustments, which in the opinion of management are considered necessary to
present fairly the results for the periods presented.  This quarterly
report on Form 10-Q should be read in conjunction with the audited financial
statements and notes thereto and other disclosures, including those items
disclosed under the caption “Risk Factors” contained in the Company’s 2008
Annual Report on Form 10-K.





The
Condensed Consolidated Statements of Operations for the interim periods
presented are not necessarily indicative of the results expected for the entire
year ending December 31, 2009, for any future year, or for any other future
interim period.





Certain
prior period amounts have been reclassified to conform to the current period
presentation.






- 4
-





NOTE
2 – ACQUISITIONS





Gemstar
Acquisition





On May 2, 2008, the Company acquired
Gemstar in a cash and stock transaction for $2.65 billion.  Gemstar
was a technology, media and entertainment company that developed, licensed,
marketed and distributed products and services targeted at the video guidance
and entertainment needs of consumers worldwide.




The Company, based upon estimated fair
values as of May 2, 2008, made an allocation of the purchase price to the net tangible and intangible
assets acquired.The
Company’s purchase price allocation has been
finalizedas follows (in
thousands):





Cash
      and cash equivalents
                $         663,618Trade
      accounts receivable
                74,848Property
      and equipment
                72,546Goodwill
                932,755Identifiable
      intangible assets
                1,118,570Other
      assets
                56,667Accounts
      payable and other liabilities
                (144,708)Restructuring
      charge (See note 9)
                (21,162)Deferred
      tax liabilities, net
                (3,815)Deferred
      revenue
                (85,461)Capital
      lease obligations
                (11,898)Total
      purchase price
                $      2,651,960





Muze
Acquisition





On April 30, 2009, the Company acquired
substantially all of the assets of Muze for approximately $17.0 million in
cash.  Muze provides metadata on video, music, games and books to
retailers, Internet destinations, software producers, consumer electronics
manufacturers and mobile service providers in the United States and
Europe.  The Company acquired Muze to expand its worldwide
entertainment metadata portfolio and enhance its technology platform for
delivering metadata.








Pro
Forma Financial Information





The pro forma financial information
presented below (in millions, except per share amounts) assumes the acquisition
of Gemstar had occurred on January 1, 2007.  The pro forma financial
information does not include the results of Software, Games, eMeta and the Media
Properties as these businesses have been classified as discontinued
operations.  The pro forma financial information assumes $275 million
of net proceeds from the sale of the Media Properties reduced the amount of debt
issued in conjunction with acquiring Gemstar.  The pro forma
information presented is for illustrative purposes only and is not necessarily
indicative of the results of operations that would have been realized if the
acquisition had been completed on the date indicated, nor is it indicative of
future operating results. The pro forma financial information does not include
any adjustments for operating efficiencies or cost savings.






- 5
-







Three
      Months Ended
                  June
      30,
                
                Six
      Months Ended
                  June
      30,2008
                
                2008Net
      revenue
                $   101.7
                
                $    205.4Operating
      (loss) income (1)
                $     (0.2)
                
                $      38.3(Loss)
      income from continuing operations (1)
                $     (2.3)
                
                $      19.8Basic
      and diluted (loss) income per share from   continuing
      operations
                $  (0.02)
                
                $   
       0.19








(1)
            The
      six months ended June 30, 2008, includes a $32.5 million pre-tax benefit
      from a Gemstar insurance
settlement.








NOTE
3 – DISCONTINUED OPERATIONS AND ASSETS HELD FOR SALE





On
February 28, 2009, the Company sold its TV Guide Network and TV Guide Online
business units for approximately $242 million in cash, of which $36.8 million
was deposited in a 15 month escrow account as a source of recovery in the event
the buyer has an indemnifiable claim.  The Company has recorded this
$36.8 million as restricted cash on its Condensed Consolidated Balance
Sheet.





The
assets and liabilities attributable to the Company’s TV Guide Network and TV
Guide Online business units classified in the Condensed Consolidated Balance
Sheet as held for sale at December 31, 2008, consist of the following (in
thousands):




Trade
      accounts receivable, net
                $   
        17,320Property
      and equipment, net
                22,914Other
      assets
                4,893Goodwill
      and intangible assets
                223,595Accounts
      payable and other liabilities
                (11,749)Capital
      lease
                (11,456)Deferred
      revenue
                (8,574)Total
      net assets held for sale
                $   236,943
 On
January 27, 2009, the Company sold its TVG Network business unit for
approximately $50.7 million.  Included in the net assets sold was
$11.9 million of cash.
 
 The
assets and liabilities attributable to the Company’s TVG Network business unit
classified in the Condensed Consolidated Balance Sheet as held for sale at
December 31, 2008, consist of the following (in thousands):


- 6 -






Trade
      accounts receivable, net
                    $    5,255Property
      and equipment, net
                    3,927Other
      assets
                    1,499Goodwill
      and intangible assets
                    50,119Accounts
      payable and other liabilities
                    (24,242)Total
      net assets held for sale
                    $  36,558





On
December 1, 2008, the Company sold its TV Guide Magazine business unit in
exchange for the assumption of its net liabilities.  During the three
months ended June 30, 2009, the Company made a $2.6 million payment to the buyer
of TV Guide Magazine to settle the final working capital
adjustment.  This payment is recorded in proceeds from disposition of
businesses, net of costs to sell on the Consolidated Statement of Cash
Flows.





On
November 17, 2008, the Company sold its eMeta business unit for $0.8 million in
cash.





On April
1, 2008, the Company sold its Software business unit for $191 million and its
Games business unit for $4 million in cash.





The
results of operations of the Company’s discontinued businesses consist of the
following (in thousands):




Three Months
      Ended
                                                              
                                                              Six Months
      EndedJune 30,
                                                              
                                                              June 30,2009
                                                              
                                                              2008
                                                              
                                                              2009
                                                              
                                                              2008Net
revenue:Software
                                                              $         -
                                                              
                                                              $         -
                                                              
                                                              $         -
                                                              
                                                              $  27,352Games
                                                              -
                                                              
                                                              -
                                                              
                                                              -
                                                              
                                                              1,627eMeta
                                                              -
                                                              
                                                              1,968
                                                              
                                                              -
                                                              
                                                              3,912TV
      Guide Magazine
                                                              -
                                                              
                                                              19,777
                                                              
                                                              -
                                                              
                                                              19,777TV
      Guide Network / TV Guide Online
                                                              -
                                                              
                                                              21,663
                                                              
                                                              18,363
                                                              
                                                              21,663TVG
      Network
                                                              -
                                                              
                                                              8,834
                                                              
                                                              4,562
                                                              
                                                              8,834Pre-tax (loss)
      income:Software
                                                              $         -
                                                              
                                                              $  (8,222)
                                                              
                                                              $         -
                                                              
                                                              $  (6,865)Games
                                                              -
                                                              
                                                              -
                                                              
                                                              -
                                                              
                                                              (2,551)eMeta
                                                              -
                                                              
                                                              (1,656)
                                                              
                                                              -
                                                              
                                                              (3,545)TV Guide
      Magazine
                                                              
                                                              
                                                              (1,671)
                                                              
                                                              
                                                              
                                                              (1,671)TV
      Guide Network/TV Guide Online
                                                              
                                                              
                                                              2,218
                                                              
                                                              1,825
                                                              
                                                              2,218TVG
      Network
                                                              -
                                                              
                                                              (1,073)
                                                              
                                                              (694)
                                                              
                                                              (1,073)Pre-tax (loss) gain on disposal of
      business units
                                                              (193)
                                                              
                                                              151,284
                                                              
                                                              (3,661)
                                                              
                                                              151,284Income tax benefit (expense)
      (1)
                                                              22
                                                              
                                                              (45,422)
                                                              
                                                              (33,811)
                                                              
                                                              (44,731)(Loss) income
      from discontinued operations, net of tax
                                                              $             (171)
                                                              
                                                              $          95,458
                                                              
                                                              $        (36,341)
                                                              
                                                              $          93,066




(1)
            The
      income tax expense for the six months ended June 30, 2009, is primarily
      due to the sales of TVG Network and TV Guide Network / TV Guide Online
      including goodwill for which the Company had no basis for tax
      purposes.








- 7
-




NOTE
4 – DEBT





Convertible
Senior Notes





In
August 2006 the Company issued $240.0 million in 2.625% convertible
senior notes (the “Convertible Notes”) due 2011 at par. The Convertible Notes
may be converted, under certain circumstances, based on an initial conversion
rate of 35.3571 shares of common stock per $1,000 principal amount of notes
(which represents an initial conversion price of approximately $28.28 per
share).




On January 1, 2009, the Company adopted FASB Staff
Position(“FSP”)APB 14-1,Accounting for
Convertible Debt Instruments That May Be Settled in Cash Upon Conversion
(Including Partial Cash Settlement)(“FSP14-1”).  FSP 14-1 specifies that
issuers of such instruments should separately account for the
liability and equity
components in a manner that will reflect the entity’s nonconvertible debt borrowing rate on
the instrument’s issuance date when interest cost is
recognized.  The Company applied the provisions of FSP 14-1
retrospectively to all periodspresentedresultingin an increase to interest expense of $2.1millionand $4.1million,adecrease to net incomeof $1.3 millionand $2.6millionand a decreaseindilutednet incomeper share of $0.02and $0.04for the threeand sixmonths endedJune30, 2008,respectively.  Additionally,
stockholders’equity at December31, 2008,was increased by $15.9million and long-term debt was
decreased by $26.6 million
to a carrying amount of $213.4 million.





As ofJune30, 2009,and December 31, 2008,the principal amount of the Company’s Convertible Notes was $240.0
million.  As ofJune30, 2009, the unamortized discount on the
Convertible Notesdue
toapplying the provisions
of FSP 14-1 was $22.0million, resulting in a carrying amount
of $218.0million.During thethreeand sixmonths endedJune30, 2009, the Company recordedan additional$2.3millionand $4.6millionof interest expensefor the Convertible Notesrelated to the amortization of the
discount due to applying the provisions of FSP 14-1.





Senior
Secured Term Loan





In
connection with the Gemstar acquisition, the Company entered into and fully
drew-down a $550 million five year senior secured term loan credit facility
(“Term Loan”).  As required under the Term Loan, during the three
months ended March 31, 2009, the Company used $240.0 million of the proceeds
from the Media Properties sale to make a payment on the Term Loan.  On
May 6, 2009, the Company made a $50 million voluntary payment on the Term Loan
reducing the outstanding balance to $257.2 million as of June 30,
2009.  In addition,
these repayments accelerated the amortization of note issuance costs resulting
in $1.2 million and $3.2 million of additional interest expense for the three
and six months ended June 30, 2009, respectively.  Unamortized note
issuance costs related to the Term Loan as of June 30, 2009, were $18.2 million
and are included in other long-term assets on the Condensed Consolidated Balance
Sheet.





11%
Senior Notes





In
connection with the Gemstar acquisition, the Company issued $100 million of 11%
senior notes (“11% Senior Notes”) due 2013.  The 11% Senior Notes
include customary covenants, including fixed charge coverage minimums and
restrictions on acquisitions, additional debt incurrence and dividend payments
among others.  Interest is payable semiannually in arrears on November
15 and May 15.  Provided that the Term Loan has been repaid, the
Company may redeem some or all of the 11% Senior Notes at any time on or after
November 15, 2009, at a price equal to 100% of the principal amount of notes to
be redeemed.






- 8
-




NOTE
5 – INVESTMENTS AND FAIR VALUE MEASUREMENTS





The
following is a summary of available-for-sale and other investment securities (in
thousands) as of June 30, 2009:





Cost
                                                        
                                                        Unrealized
      Gains
                                                        
                                                        Unrealized
      Losses
                                                        
                                                        Fair
      ValueCash
                                                        
                                                        $    37,833
                                                        
                                                        $              -
                                                        
                                                        $               -
                                                        
                                                        $      37,833Cash
      Equivalents - money markets
                                                        134,144
                                                        
                                                        -
                                                        
                                                        -
                                                        
                                                        134,144Total
      cash and cash equivalents
                                                        $  171,977
                                                        
                                                        $              -
                                                        
                                                        $               -
                                                        
                                                        $   171,977Available-for-sale
      investments:Auction
      rate securities
                                                        $    17,100
                                                        
                                                        $              -
                                                        
                                                        $    (1,732)
                                                        
                                                        $     15,368Commercial
      paper
                                                        4,984
                                                        
                                                        -
                                                        
                                                        (1)
                                                        
                                                        4,983Corporate
      debt securities
                                                        42,518
                                                        
                                                        236
                                                        
                                                        (22)
                                                        
                                                        42,732Treasury/Agencies
                                                        33,784
                                                        
                                                        11
                                                        
                                                        (3)
                                                        
                                                        33,792Total
      available-for-sale investments
                                                        $    98,386
                                                        
                                                        $       247
                                                        
                                                        $   
      (1,758)
                                                        
                                                        $   96,875Auction
      rate securities classified as trading
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        $     55,571ARS
      Put Option
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        $       6,729Total
      cash, cash equivalents and investments
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        $   331,152





The
following is a summary of available-for-sale and other investment securities (in
thousands) as of December 31, 2008:





Cost
                    
                    Unrealized
      Gains
                    
                    Unrealized
      Losses
                    
                    Fair
      ValueCash
                    
                    $    37,271
                    
                    $              -
                    
                    $               -
                    
                    $      37,271Cash
      Equivalents - money markets
                    154,842
                    
                    -
                    
                    -
                    
                    154,842Cash
      Equivalents – 0-90 day investments
                    7,072
                    
                    4
                    
                    (1)
                    
                    7,075Total
      cash and cash equivalents
                    $  199,185
                    
                    $             4
                    
                    $            (1)
                    
                    $   199,188Available-for-sale
      investments:Auction
      rate securities
                    $    17,100
                    
                    $             -
                    
                    $    (2,758)
                    
                    $     14,342Commercial
      paper
                    22,066
                    
                    24
                    
                    (21)
                    
                    22,069Corporate
      debt securities
                    24,184
                    
                    188
                    
                    (37)
                    
                    24,335Treasury/Agencies
                    32,329
                    
                    43
                    
                    (25)
                    
                    32,347US
      and municipal securities
                    7,381
                    
                    20
                    
                    -
                    
                    7,401Total
      available-for-sale investments
                    $  103,060
                    
                    $        275
                    
                    $    (2,841)
                    
                    $   100,494Auction
      rate securities classified as trading
                    
                    
                    
                    
                    
                    
                    $     52,005ARS
      Put Option
                    
                    
                    
                    
                    
                    
                    $     10,370Total
      cash, cash equivalents and investments
                    
                    
                    
                    
                    
                    $   362,057






- 9 
-





The
following inputs, as defined under Statement of Financial Accounting Standard
(“SFAS”) No. 157, Fair
Value(“SFAS 157”),
were used to determine the fair value of the Company’s investment securities at
June 30, 2009 (in thousands):
  Quoted
      Prices
                                                                                          in
      Active
                                                                                          Markets
      for
                                                                                          Identical
      Assets
                                                                                        
                                                                                        Significant
                                                                                          Other
                                                                                          Observable
                                                                                          Inputs
                                                                                        
                                                                                        Significant
                                                                                          Unobservable
                                                                                          InputsTotal
                                                                                        
                                                                                        (Level 1)
                                                                                        
                                                                                        (Level 2)
                                                                                        
                                                                                        (Level 3)Money market
      funds
                                                                                        
                                                                                        $       134,144
                                                                                        
                                                                                        $       134,144Money market funds (restricted
      cash)
                                                                                        
                                                                                        36,793
                                                                                        
                                                                                        36,793Fixed income available-for-sale
      securities
                                                                                        
                                                                                        81,507
                                                                                        
                                                                                        
                                                                                        
                                                                                        $         81,507Auction rate securities
      (Available-for-sale)
                                                                                        
                                                                                        15,368
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        $         15,368Auction rate securities
      (Trading)
                                                                                        
                                                                                        55,571
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        55,571ARS Put
    Option
                                                                                        
                                                                                        6,729
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        6,729Total
                                                                                        
                                                                                        $       330,112
                                                                                        
                                                                                        $       170,937
                                                                                        
                                                                                        $         81,507
                                                                                        
                                                                                        $         77,668


The
interest rate reset auction events for the Company’s auction rate securities
have failed since early 2008. Therefore, the fair values of these securities are
estimated taking into account such factors as likelihood of redemption, credit
quality, duration, insurance wraps and expected future cash flows. These
securities were also compared, when possible, to other observable market data
with similar characteristics to the securities held by the
Company.  The Company’s auction rate securities portfolio at June 30,
2009, includes solely AAA rated investments, comprised of federally insured
student loans and municipal and educational authority bonds. The Company
continues to earn interest on all of its auction rate security
instruments.  In addition, in December 2008 the Company entered into
an agreement with UBS AG which provides (i) the Company the right (“ARS Put
Option”) to sell auction rate securities with a par value of $62.3 million back
to UBS AG at par, at the Company’s sole discretion, anytime during the period
from June 30, 2010 through July 2, 2012, and (ii) UBS AG the
right to purchase these auction rate securities or sell them on the Company’s
behalf at par anytime through July 2, 2012. The Company elected to measure
the ARS Put Option under the fair value option of SFASNo. 159, The Fair Value Option for Financial
Assets and Financial Liabilities.  The applicable auction rate
securities are classified as trading and are recorded in short-term investments
at June 30, 2009, and long-term marketable securities at December 31,
2008.





The
following table provides a summary of changes in the Company’s Level 3 auction
rate securities and ARS Put Option as of June 30, 2009 (in
thousands):






Balance at December 31,
      2008
                          $       76,717Gain on ARS classified as trading
      and recorded in other income
                          3,641Unrealized gain included in
      accumulated other comprehensive income
                          1,026ARS Put Option loss recorded in
      other income
                          (3,641)Purchases and settlements,
      net
                          (75)Balance at June 30,
      2009
                          $       77,668






On April 1, 2009, the Company adopted
the provisions ofFSPSFAS107-1 and APB 28-1,Interim
Disclosures about Fair Value of Financial Instruments(“FSP 107-1”). FSP 107-1 requires
additional






- 10
-
 
  disclosures about the Company’s
financial instruments, such as the Company’s debt. As the adoption of FSP 107-1
only affected disclosure requirements, it did not have a material impact on the
Company’s financial position or results from operations.The
following inputs, as defined under SFAS 157, were used to determine the
fair value of the Company’s outstanding debt at June 30, 2009 (in
thousands):





Fair
  ValueCarrying
    Value
                                              
                                              Quotet
      Prices
                                                in
      Active
                                                Markets
      for
                                                Identical
                                                Assets
                                              
                                              Significant
                                                Other
                                                Observable
                                                Inputs(Level 1)
                                              
                                              (Level 2)Term Loan
                                              $            257,248
                                              
                                              $       255,96211% Senior
      Notes
                                              100,000
                                              
                                              
                                              
                                              $       104,220Convertible Notes
      (1)
                                              218,015
                                              
                                              232,320$            575,263(1) The principal amount of the
      Convertible Notes is $240 million (see Note
  4).


On
January 1, 2009, the Company adopted FSP SFAS 157-2, (“FSP 157-2”). FSP 157-2
deferred the effective date of SFAS 157 as it relates to non-financial assets
and liabilities including items such as reporting units measured at fair value
in a goodwill impairment test and non-financial assets acquired and liabilities
assumed in a business combination, to allow the FASB and constituents additional
time to consider the effect of various implementation issues that have arisen,
or that may arise, from the application of SFAS 157.  The adoption of
FSP 157-2 did not have a material impact on the Company’s financial position or
operating results.





NOTE
6 – EQUITY-BASED COMPENSATION





Stock
Option Plans





During
the period ended June 30, 2009, the Company granted stock options and restricted
stock awards from the 2008 Equity Incentive Plan (the “2008 Plan”) and the 2000
Equity Incentive Plan (the “2000 Plan”).




As
of June 30, 2009, the Company had a total of 29.6 million shares reserved
and 15.0 million shares available for issuance under the 2000 and 2008
Plans. The 2000 and 2008 Plans provide for the grant of stock options,
restricted stock awards and similar types of equity awards by the Company to
employees, officers, directors and consultants of the Company.  For
options granted during the periods ended June 30, 2009, the vesting period was
generally four years where one quarter of the grant vests at the end of the
first year, and the remainder vests monthly.  Option grants have
contractual terms ranging from five to ten years.




Restricted
stock awards issued during the period ended June 30, 2009, generally vest
annually over four years.  As of June 30, 2009, the number of shares
awarded but unvested was 0.7 million under the 2000 Plan and 0.2 million under
the 2008 Plan.




Employee
Stock Purchase Plan






- 11
-




The Company’s
2008 Employee Stock Purchase Plan (the “2008 ESPP”) allows eligible employee
participants to purchase shares of the Company’s common stock at a discount
through payroll deductions. The 2008 ESPP consists of a twenty-four-month
offering period with four six-month purchase periods in each offering period.
Employees purchase shares in each purchase period at 85% of the market value of
the Company’s common stock at either the beginning of the offering period or the
end of the purchase period, whichever price is lower.




As
of June 30, 2009, the Company had reserved 7.5 million shares of common stock
under the 2008 ESPP, and has 7.3 million shares available for future
issuance.




Valuation
and Assumptions




The
Company uses the Black-Scholes option pricing model to determine the fair value
of stock options and employee stock purchase plan shares. The fair value of
equity-based payment awards on the date of grant is determined by an
option-pricing model using a number of complex and subjective variables. These
variables include expected stock price volatility over the term of the awards,
actual and projected employee stock option exercise behaviors, risk-free
interest rate and expected dividends. The Company determines the fair value of
its restricted stock awards as the difference between the market value of the
awards on the date of grant less the exercise price of the awards
granted.




Estimated
volatility of the Company’s common stock for new grants is determined by using a
combination of historical volatility and implied volatility in market traded
options. When historical data is available and relevant, the expected term of
options granted is determined by calculating the average term from historical
stock option exercise experience. When there is insufficient historical exercise
data to provide a reasonable basis upon which to estimate expected term due to
changes in the terms of option grants, the Company uses the “simplified method”
as permitted under Staff Accounting Bulletin No. 110.  For options
granted after July 15, 2008, the Company changed its standard vesting terms from
three to four years and its contractual term from five to seven
years.  Since the Company did not have sufficient data for options
with four year vesting terms and seven year contractual life, the simplified
method was used to calculate expected term.  The risk-free interest
rate used in the option valuation model is from U.S. Treasury
zero-coupon issues with remaining terms similar to the expected term on the
options. The Company does not anticipate paying any cash dividends in the
foreseeable future and therefore uses an expected dividend yield of zero in the
option valuation model. In accordance with SFAS No. 123(R), Share Based Payment, the
Company estimates forfeitures at the time of grant and revises those estimates
in subsequent periods if actual forfeitures differ from those estimates. The
Company uses historical data to estimate pre-vesting option forfeitures and
record equity-based compensation expense only for those awards that are expected
to vest. The assumptions used to value equity-based payments are as
follows:





Three
      months ended
                    June
      30,
                  
                  Six
      months ended
                    June
      30,2009
                  
                  2008
                  
                  2009
                  
                  2008Option
      Plans:Dividends
                  None
                  
                  None
                  
                  None
                  
                  NoneExpected
      term
                  4.6
      years
                  
                  3.1
      years
                  
                  4.5
      years
                  
                  3.1
      yearsRisk
      free interest rate
                  2.0%
                  
                  2.8%
                  
                  1.9%
                  
                  2.8%Volatility
      rate
                  41%
                  
                  42%
                  
                  46%
                  
                  42%ESPP
      Plan:Dividends
                  N/A
                  
                  N/A
                  
                  None
                  
                  NoneExpected
      term
                  N/A
                  
                  N/A
                  
                  1.3
      years
                  
                  1.3
      yearsRisk
      free interest rate
                  N/A
                  
                  N/A
                  
                  0.8%
                  
                  2.1%Volatility
      rate
                  N/A
                  
                  N/A
                  
                  53%
                  
                  45%






- 12
-




As of June
30, 2009, there was $32.6 million of unrecognized compensation cost, adjusted
for estimated forfeitures, related to unvested equity-based payments granted to
employees. Total unrecognized compensation cost will be adjusted for future
changes in estimated forfeitures and is expected to be recognized over a
weighted average period of 2.3 years.




The
weighted average fair value of equity-based awards are as follows:





Three
      months ended
                    June
      30,
                  
                  Six
      months ended
                    June
      30,2009
                  
                  2008
                  
                  2009
                  
                  2008Weighted
      average fair value:Option
      grants
                  $7.63
                  
                  $4.31
                  
                  $6.55
                  
                  $4.42Employee
      purchase share rights
                  N/A
                  
                  N/A
                  
                  $4.92
                  
                  $4.53Restricted
      stock award grants
                  N/A
                  
                  $15.49
                  
                  $15.73
                  
                  $15.49








The
total intrinsic value of options exercised during the three and six months ended
June 30, 2009, was $1.3 million and $1.4 million, respectively. The intrinsic
value is calculated as the difference between the market value on the date of
exercise and the exercise price of the shares.








NOTE 7 – GOODWILL AND OTHER
INTANGIBLE ASSETS





The
following table summarizes the Company’s goodwill activity associated with its
continuing operations (in thousands):





Goodwill,
      net at December 31, 2008
                    $    828,185Changes due to foreign currency exchange rates and
      other
                    3,718Muze acquisition
                    10,510Gemstar purchase accounting adjustments
                    5,806Goodwill,
      net at June 30, 2009
                    $
      848,219





During
the three months ended June 30, 2009, the Company completed extensive consumer
research regarding its brands.  This consumer research indicated that
the brands acquired by the Company do not represent the future vision of the
Company and do not carry a positive connotation in the market.  The
Company determined these results to be an indicator of potential impairment of
its trademark intangible assets.  The Company determined the fair
value of its trademark intangible assets using the relief-from-royalty
method.  The relief-from-royalty method uses level 3 inputs to
estimate the after-tax saving enjoyed by owning the assets as opposed to paying
a third party for its use.  The Company determined the fair value of
its trademark and intangible assets to be $8.3 million and recorded a $43.1
million impairment charge during the three months ended June 30,
2009.  This impairment charge is included in restructuring and asset
impairment charges on the Condensed Consolidated Statements of
Operations.





The
Company’s finite-lived intangible assets associated with its continuing
operations are as follows (in thousands):




- 13
-










June
      30, 2009Gross
      Costs
                
                Accumulated
                  Amortization
                
                NetFinite-lived  intangibles:Developed technology and
      patents
                $     828,186
                
                $     (96,951)
                
                $    731,235Existing contracts
      and   customer relationships
                46,676
                
                (9,244)
                
                37,432Content
      databases and   other
                48,058
                
                (7,242)
                
                40,816Trademarks / Tradenames
                8,300
                
                (17)
                
                8,283$    931,220
                
                $   (113,454)
                
                $    817,766





December
      31, 2008Gross
      Costs
                
                Accumulated
                  Amortization
                
                NetFinite-lived  intangibles:Developed technology and
      patents
                $      826,968
                
                $      (61,438)
                
                $      765,530Existing contracts and
      customer relationships
                43,635
                
                (6,800)
                
                36,835Content
      database and      other
                44,652
                
                (4,690)
                
                39,962Trademarks / Tradenames
                55,047
                
                (2,303)
                
                52,744$    970,302
                
                $      (75,231)
                
                $     895,071





As of
June 30, 2009, the Company estimates its amortization expense in future periods
to be as follows (in thousands):





Amortization
                      ExpenseRemainder
      of 2009
                    
                    $     41,1272010
                    
                    79,6402011
                    
                    76,5182012
                    
                    72,6052013
                    
                    70,539Thereafter
                    
                    477,337Total
      amortization expense
                    
                    $   817,766





NOTE
8 – STRATEGIC INVESTMENT SALE





During
the first quarter of 2008 the Company recognized a gain of $5.2 million on the
sale of its investment in Digimarc Corporation.





NOTE
9 – RESTRUCTURING AND ASSET IMPAIRMENT CHARGES





Muze
Restructuring Plan





In
connection with the acquisition of the assets of Muze (see Note 2), management
implemented a plan to restructure Muze’s operations resulting in a charge of
$0.9 million during the three months ended June 30, 2009.  This was
done to eliminate redundancies with the Company’s entertainment metadata
business.  This charge included $0.7 million for employee severance
and a $0.2 million liability for the fair




- 14
-
 
  value of
future lease payments on abandoned office space.  As of June 30, 2009,
$0.6 million of these costs remain to be paid.  The Company
anticipates paying the majority of these costs in the third quarter of
2009.





Q109
Restructuring Plan





In
conjunction with the disposition of the Media Properties, the Company’s
management approved several actions resulting in a restructuring and asset
impairment charge of $8.4 million.  This was done to create cost
efficiencies for the Company now that it no longer supports the Media
Properties.  These charges included $1.3 million in severance, a $2.9
million liability for the fair value of future lease payments on abandoned
office space and $4.2 million in non–cash asset impairment charges related to
the abandoned office space.  As of June 30, 2009, the liability for
future lease payments related to the abandoned office space was $2.7
million.





Gemstar
Acquisition Restructuring Plan





In conjunction with the Gemstar
acquisition, management acted upon a pre-acquisition plan to restructure certain
Gemstar operations resulting in severance of $21.2 million. This was done in
order to create cost efficiencies for the combined Company. The severance
liability was recognized as an assumed liability in the Gemstar acquisition and,
accordingly, resulted in an increase to goodwill.As of December 31, 2008, the Company had
paid $19.1 million of these costs and had a remaining liability of $2.1million.  During the six
months ended June 30, 2009, the Company paid $1.8 million of these costs
resulting in aremaining
liability of $0.3million.The Company anticipates
payingthe remaining
liability in the thirdquarter of 2009.





Fiscal
2007 Restructuring Plans





During fiscal year 2007 the Company’s
Board of Directors approved several restructuring actions and an organizational
realignment program. In addition, the Company discontinued its Hawkeye
anti-piracy service.As of
December 31, 2008, the Company had $0.4 million in accrued liabilities relating
to these restructuring actions.  During the first quarter of 2009 the
Company reversed the remaining $0.4 million in liabilities.  This
reversal was recorded in restructuring and asset impairment chargesin the Condensed Consolidated Statement
of Operations.





NOTE
10 – EARNINGS PER SHARE (“EPS”)





On January 1, 2009, the Company
adopted FSP EITF 03-6-1, Determining Whether Instruments
Granted in Share-Based Payment Transactions Are Participating Securities
(“FSP EITF 03-6-1”). FSP EITF 03-6-1 defines unvested share-based payment awards
that contain nonforfeitable rights to dividends as participating securities that
should be included in computing earnings per share (EPS) using the two-class
method under SFAS No. 128, Earnings Per
Share.   Under FSP EITF 03-1-1 the Company’s non-vested
restricted stock awards granted prior to June 30, 2009, qualify as participating
securities. As required by FSP EITF 03-6-1 all prior-period EPS data has been
adjusted.  The adoption did not have a material impact on the
Company’s financial condition or results of operations.




Basic net EPS is computed using the
weighted average number of common shares outstanding during the
period.  Diluted EPS is computed using the weighted average number of
common and dilutive common equivalent shares outstanding during the period
except for periods of operating loss for which no common share equivalents are
included because their effect would be anti-dilutive.




The following weighted average potential
common shares were excluded from the computation of diluted net earnings per
share as their effect would have been anti-dilutive(in thousands):
   - 15 -


Three months
      ended
                                                  June 30,
                                                
                                                Six months
      ended
                                                  June 30,2009
                                                
                                                2008
                                                
                                                2009
                                                
                                                2008Stock
    options
                                                7,960
                                                
                                                7,957
                                                
                                                5,364
                                                
                                                4,980Restricted
      stock
                                                863
                                                
                                                840
                                                
                                                964
                                                
                                                1,103Warrants
(1)
                                                7,955
                                                
                                                7,955
                                                
                                                7,955
                                                
                                                7,955Convertible
      Notes
                                                8,486
                                                
                                                8,486
                                                
                                                8,486
                                                
                                                8,486Total weighted average potential
      common shares excluded     from diluted net
      earnings per share
                                                25,264
                                                
                                                25,238
                                                
                                                22,769
                                                
                                                22,524


(1) In
August 2006, in conjunction with the issuance of the Convertible Notes, the
Company sold warrants to purchase up to 7.96 million shares of its common
stock at a price of $32.9248 per share. The warrants expire on various
dates from August 16, 2011 through the 104th
scheduled trading day following August 16, 2011, and must be settled in net
shares.  The Companyalsoentered into aconvertible bond call option whereby the
Company has options to purchase up to 7.96 million
sharesof the
Company’s common stock at a price of
$28.2829 per share. These options expire on August 15, 2011 and must
be settled in net shares.





NOTE
11 – COMPREHENSIVE (LOSS) INCOME





The
components of comprehensive (loss) income, net of taxes, are as follows (in
thousands):





Three Months
      Ended
                                                                                June 30,
                                                                              
                                                                              Six Months
      Ended
                                                                                June 30,2009
                                                                              
                                                                              2008
                                                                              
                                                                              2009
                                                                              
                                                                              2008Net (loss)
      income
                                                                              $       (2,142)
                                                                              
                                                                              $  84,653
                                                                              
                                                                              $  (43,657)
                                                                              
                                                                              $  89,683Other comprehensive (loss)
      income:Unrealized (losses) gains on investments (1)
                                                                              (36)
                                                                              
                                                                              (2,552)
                                                                              
                                                                              1,057
                                                                              
                                                                              (7,983)Foreign
      currency translation adjustments (2)
                                                                              2,281
                                                                              
                                                                              (5,274)
                                                                              
                                                                              862
                                                                              
                                                                              (4,327)Comprehensive (loss)
      income
                                                                              $            103
                                                                              
                                                                              $  76,827
                                                                              
                                                                              $  (41,738)
                                                                              
                                                                              $  77,373


(1)
            Changes
      in unrealized (losses) gains on investments during the six months ended
      June 30, 2008, include the reduction of $3.2 million, net of taxes, of
      unrealized gains which became realized gains when the Company sold its
      investment in Digimarc Corporation during the first quarter of 2008 (see
      Note 8).


(2)
            Foreign
      currency translation adjustments for the three and six months ended June
      30, 2008,  include a reduction of $5.0 million due to the sale
      of Software (see Note 3).








NOTE
12 – RECENT ACCOUNTING PRONOUNCEMENTS





In the second quarter of 2009 the
Company adopted SFAS No. 165,Subsequent Events(“SFAS
165”).  SFAS 165 defines subsequent events as either recognized
(previously referred to in practice as Type I) or non-recognized (previously
referred to in practice as Type II).  The adoption of SFAS 165 did not
have a material impact on the Company’s financial position or results from
operations.





On April 1, 2009, the Company adoptedFSP SFAS 115-2 and FAS 124-2, Recognition and Presentation of
Other-Than-Temporary Impairments (“FSP 115-2”).  FSP 115-2
replaces the existing requirement that management assert it has both the intent
and ability to hold an impaired security until




- 16
-
 
  recovery
with the requirement that management assert: (i) it does not have the intent to
sell the security; and (ii) it is more likely than not it will not have to sell
the security before recovery of its cost basis.  FSP 115-2 also
incorporates examples of factors from existing literature that should be
considered in determining whether a debt security is other-than-temporarily
impaired.  The adoption
of FSP 115-2 did not have a material impact on the Company’s financial position
or results from operations.





On April 1, 2009, the Company adoptedFSP SFAS 157-4, Determining Fair Value When the
Volume and Level of Activity for the Asset or Liability Have Significantly
Decreased and Identifying Transactions That are Not Orderly (“FSP
157-4”).  FSP 157-4 affirms that the objective of fair value when the
market for an asset is not active is the price that would be received to sell
the asset in an orderly transaction and clarifies and includes additional
factors for determining whether potentially comparative transactions are orderly
transactions or transactions that are not orderly (that is, distressed or
forced).  The adoption
of FSP 157-4 did not have a material impact on the Company’s financial position
or results from operations.





On January 1, 2009, the Company adopted
SFASNo.161,Disclosures about
Derivative Instruments and Hedging Activities, an amendment of FASB Statement
No. 133(“SFAS 161”). SFAS 161
requires entities that utilize derivative instruments to provide qualitative
disclosures about their objectives and strategies for using such instruments, as
well as any details of credit-risk-related contingent features contained within
derivatives. SFAS 161 also requires entities to disclose additional information
about the amounts andlocation of derivativeswithin the financial statements, how the
provisions of SFAS 133 have been applied, and the impact that hedges have on an
entity’s financial position, financial performance and cash flows.The adoption of SFAS 161 primarily
affected disclosure requirements and did not have a material impact on the
Company’sfinancial position or operating
results.





On January 1, 2009, the Company adoptedSFAS No. 141 (revised
2007),Business Combinations(“SFAS 141(R)”).Newrequirements under the revised standard
include: (i) the fair value of stock provided as consideration be measured as of
the acquisition date instead of the announcement date; (ii) acquisition-related
costs be recognized separately from the acquisition, generally as an expense,
instead of treated as a part of the cost of the acquisition that was allocated
to the assets acquired and the liabilities assumed; (iii) restructuring costs
that the acquirer expected, but was not obligated to incur, be recognized
separately from the acquisition instead of recognized as if they were a
liability assumed at the acquisitiondate; (iv) contingent considerationbe recognizedat the acquisition date, measured at its
fair value at that date,
instead ofrecognized when
the contingency was resolved and consideration was issued or became
issuable; (v)recognizing a gain whenthefair value of the identifiable net
assets acquired exceeds the fair value of the consideration
transferredinstead of
allocatingthe “negative
goodwill” amountas a pro rata reduction of the amounts
that otherwise would have been assigned to particular assets
acquired; (vi)research and development assets acquired
in a business combination willberecognizedattheiracquisition-date fair
valuesasassets acquired in a business
combinationinstead of
beingmeasured at their
acquisition-date fair values and thenimmediately charged to expense; and
(vii)changes in the amount
of deferred tax benefitscreated ina business combination, outside of the valuation
period,will be recognizedeither in income from continuing
operations or directly in contributed capital, depending on the
circumstances, instead of
recognized through a
corresponding reduction to goodwill or certain noncurrent assets or an increase
in so-called negative goodwill.The adoption of SFAS 141(R)
did not have a material impact on the Company’s financial position or results
from operations.





On January 1, 2009, the Company adopted
FSPSFAS 142-3,Determination of
the Useful Life of Intangible Assets(“FSP 142-3”). FSP142-3 amends the factors that should be
considered in developing renewal or extension assumptions used to determine the
useful life of a recognized intangible asset under SFAS
No. 142,Goodwill and Other
Intangible Assets(“SFAS
142”) in orderto improve
the consistency between the useful life of a recognized intangible asset under
SFAS 142 and the period of expected cash flows used to measure the fair value of
the asset under SFAS No. 141(R).The adoption of FSP 142-3 did not have a
material impact on the Company’s financial position or results from
operations.




- 17
-





NOTE
13 – INCOME TAXES





The Company
recorded an income tax benefit of $31.9 million and $5.9 million from its
continuing operations for three months ended June 30, 2009 and 2008,
respectively. The Company recorded an income tax benefit of $34.6 million and
$3.7 million from its continuing operations for six months ended June 30,
2009 and 2008, respectively.  The
Company revised its full year projected results from operations during the
quarter, primarily due to the $43.1 million trademark and intangible assets
impairment charge recorded during the three months ended June 30, 2009. 
The result was an increase in income tax benefit which needed to be recorded
during the three months ended June 30, 2009, in order to reflect the appropriate
income tax benefit for the six months ended June 30, 2009, based upon the
revised full-year forecast.  The Company's effective tax rate also
benefited from the rate differential on the Company's foreign operations.The income tax benefit for the six months ended June 30, 2009, also
includes a discrete tax benefit of $1.9 million resulting from the enactment of
a California tax law change during the first quarter which reduced the balance
of deferred tax liabilities expected to be paid in 2011 and years
thereafter.  Income tax expense is based upon an annual effective tax
rate forecast, including estimates and assumptions that could change during the
year, including the amount of foreign reinvested earnings.




In
assessing the realizability of deferred tax assets, the Company considers
whether it is more likely than not that some portion or all of the deferred tax
assets will not be realized. The ultimate realization of deferred tax assets is
dependent upon the generation of future taxable income during the periods in
which those temporary differences become deductible, as well as tax planning
strategies.




Based on
projections of future taxable income over the periods in which the deferred tax
assets are deductible and the history of the Company’s profitability, the
Company believes that it is more likely than not that the benefits of these
deductible differences, net of valuation allowances, as of June 30, 2009, will
be realized.




The
Company conducts business globally and, as a result, files U.S. federal, state
and foreign income tax returns in various jurisdictions. In the normal course of
business, the Company is subject to examination by taxing authorities throughout
the world. With few exceptions, the Company is no longer subject to income tax
examinations for years before 2004.





NOTE
14 – COMMITMENTS AND CONTINGENCIES




Indemnifications




In the normal course of business, the
Company provides indemnification of varying scopes and amounts to certain of its
licensees against claims made by third parties arising out of the use and/or
incorporation of the
Company’s products, intellectual property,
services and/or technologies into the licensee’s products and services, provided the
licensee is not in violation of the terms and conditions of the agreement and/or
additional performance or other requirements for such indemnification. The
Company’s indemnification obligations are
typically limited to the cumulative amount paid to the Company by the licensee
under the license agreement, however some license agreements, including those
with our largest multiple system operators (“MSO”) and digital broadcast satellite
(“DBS”) providers, have larger limits or do
not specify a limit on amounts that may be payable under the indemnity
arrangements. The Company cannot estimate the possible range of losses thatmay affect the Company’s results of operations or cash flows in
a given period or the maximum potential impact of these indemnification
provisions on its future results of operations.




In April 2005 Gemstar received a notice
of a potential claim for indemnification from DirecTV Group, Inc.
(“DirecTV”) as a result of a lawsuit filed by
Finisar Corporation (“Finisar”) against DirecTV in the United States
District Court for the Eastern District of Texas. Finisar alleged
that several aspects of the DirecTV satellite transmission
system, including aspects ofits advanced electronic program guide
(“EPG”) and the storage, scheduling, and
transmission of data for the EPG, infringed a Finisar patent. On July 7,
2006, the Court awarded Finisar approximately $117 million. In addition, the Court ordered




- 18
-
 
  DirecTV to pay approximately $1.60
per activated set top box in licensing fees going forward in lieu of
an injunction until the expiration of Finisar’s patent in 2012. The parties both
filed appeals to the Federal Circuit,which subsequently ruled that the trial
court’s construction of certain terms of the
patent was too broad, vacated the jury’s verdict of infringement, held that one
of the seven patent claims at issue is invalid, and left standing the remaining
six claimsfor reconsideration by the trial court.
The appeals court also reversed the jury’s finding that DirecTV’s infringement was
willful.The trial
court subsequently ruled in DirecTV’s favor on its summary judgment motion
that the remaining claims of the subject patent were invalid.The Company has not established a
reserve with respect to this matter in its consolidated financial
statements.




Comcast Cable
Communications Corp., LLC v. Finisar Corporation, in theUnited StatesDistrict Court for the Northern
District of
California.In support
of a potential claim for indemnification, Comcast Cable Communications Corp.,
LLC (“Comcast”) put the Company on notice that it
had received communications fromFinisarassertinginfringement of U.S. Patent
5,404,505 (the
“‘505 patent”). On July 7, 2006, Comcast
filed a declaratory judgment action in the Northern District of California
asking the Court to rule, among other things, that it does not infringe the‘505 patent and/or that the patent is
invalid. On May 15, 2008,Finisar entered into a covenant and
stipulation with Comcast, filed with the California Court, that it would not
assert any claim of the‘505 patent against Comcast or certain
related entities, other than claim 25. On July 11, 2008, the
Court ruled on Comcast’s summary judgment motion, finding that
claim 25 is invalid, and therefore finding that Comcast’s non-infringement motion is
moot. Comcast has not taken any further action insofar as its potential
indemnity claim against the Company is concerned.




LegalProceedings




The Company isinvolved in legal proceedings related
to intellectual property rights and other matters. The following
legal proceedings
include those of the
Companyand its
subsidiaries.




Other Litigation




Thomson, Inc. v.
Gemstar—TV Guide
International,
Inc., in the Superior Court
of the State ofIndianafor theCountyofHamilton. On May23, 2008, Thomson, Inc. (“Thomson”) initiated this action, seeking, among
other things, indemnification from the Company in connection with its settlement
ofthe patent claims
against it inSuperGuide
Corporation v. DirecTV Enterprises, Inc., et al., in the United States District Court
for the Western District of North Carolina. Thomson alleges that it entered
into multiple agreements with the Company between1996 and 2003 that would require the
Company to indemnify Thomson in theSuperGuidelitigation. Specifically, Thomson asserts causes of action for
fraud/fraudulent inducement, breach of contract, breach of implied in fact
indemnity and warranty of title against infringement, and unjust
enrichment. Thomson seeks a declaration from the Court that the Company
owes Thomson defense and indemnity for SuperGuide’s claims, compensatory damages,
including fees and expenses paid by Thomson in that case, the return
ofroyalties paid by Thomson to the
Company under the aforementioned agreements, pre and post-judgment interest,
punitive damages, attorney fees, and costs of suit.  The case is set
for trialat a date to be
determined in2010.




DIRECTV, Inc. v.
Gemstar-TV Guide Interactive,
Inc., American Arbitration
Association -Los
Angeles.  On
March 20, 2009, DIRECTV, Inc. (“DIRECTV”) filed this arbitration demand seeking
indemnity for payments made in settlement of two patent infringement
lawsuits, including theSuperGuide Corporation v.
DirecTV Enterprises, Inc., et al.matter.DIRECTV seeks indemnity
under the November 21, 2003,License and Distribution Agreement and
Patent License Agreement between the partiesand claims damages plus interest and its
arbitration-related
attorneys’fees.The Company hasfiled a Response and Counterclaim for
breach of contract.Ahearing date has been setfor December 7, 2009.




In addition to theitems listed above, the
Companyis party to various
legal actions, claims and proceedingsas well as other actions, claims and
proceedings incidental to
its business. The
Companyhas established
loss provisions only for matters in which losses are probable and can be
reasonably estimated. Some of the matters pending against the
Companyinvolvepotential damage claims, or
sanctions, thatif




- 19
-
 
  granted, could require the Companyto pay damages or make other
expenditures in amounts that could havea material adverse effect on
itsfinancial position or
results of operations. At this time management hasnot reached a determination thatthe matters listed above or any other litigation,
individually or in the aggregate,areexpected to result in liabilities that
will have a material adverse effect on our financial position or results of
operations or cashflows.




NOTE
15 – SUBSEQUENT EVENTS




On June 30,
2009, the Company paid approximately $7.8 million for a music metadata
distribution business in the Asia Pacific region.  The transaction closed
on July 1, 2009.





On August 5,
2009, the Company redeemed the $100 million 11% Senior Notes at par plus accrued
interest and a $2.8 million make-whole payment representing the discounted value
of interest which the note holders would have received through November 15,
2009, the first date the 11% Senior Notes could be retired without a
premium.  In addition, the Company paid $0.6 million to the Term Loan
holders to obtain their consent to redeem the 11% Senior Notes.




Subsequent
events have been evaluated up to and including August 6, 2009, which is the date
these financial statements were issued.






- 20
-




Item 2. Management’s Discussion and Analysis of Financial
Condition and Results of Operations





The
following commentary should be read in conjunction with the financial statements
and related notes contained in our Annual Report on Form 10-K for the year ended
December 31, 2008, as filed with the SEC.





Overview





On July
15, 2009, Macrovision Solutions Corporation changed its name to Rovi Corporation
(the “Company”).  Our management and our board of
directors believe that the corporate name change better reflects our
strategy to power the discovery and enjoyment of digital
entertainment.  In executing this strategy, we made several
acquisitions and divestitures from 2007 through today.  Many of these
transactions involved established company or product brands that each carried
some market awareness and an association with a specific capability or
product.  We believe, and research validated, that none of these
acquired brands, nor the Macrovision brand itself, represented the vision and
strategy for what the Company has now become.  Based upon consumer,
customer and overall market research of not only the concept of changing the
name, but also many alternatives for a name, Rovi Corporation was selected as
our new name.  The name elicited positive connotations on a global
basis and generally associated us with exploration and discovery (i.e.,
“roving”), both of which are broad, forward-looking concepts that are desired by
our target markets.  The new visual identity and shorter name better
aids us in reaching consumers, which we believe is a critical element in
demonstrating the value of our solutions to our target customers in the CE and
Service Provider markets.




We are focused onpowering the
discovery and enjoyment of digital entertainment by providing a broad set of
integrated solutions that are embedded in our customers’ products and services
and used by end consumers to simplify and guide their interaction with digital
entertainment.  Our offerings include interactive program guides
(IPGs), embedded licensing technologies (such as recommendations and search
capability), media recognition technologies and licensing of our extensive
database of descriptive information about television, movie, music, books, and
game content and content protection technologies and services.  In
addition to offering Company developed IPGs, our customers may also license our
patents and deploy their own IPG or a third party IPG.  We group our
revenue into the following categories -(i)consumer electronics “CE”manufacturers, (ii) service
providers (cable, satellite,telecommunications, mobile and internet
service providers among others), and (iii) other.We include in service provider revenues
any revenue related to an IPG deployed by a service provider in a subscriber
household whether the ultimate payment for that IPG comes from the service
provider or from a manufacturer of a set-top box.  IPG revenues for
IPGs included in a set-top box deployed by a service provider where payment was
made by the set-top box manufacturer were previously classified in CE
manufacturers.  Revenue related to an IPG deployed in a set-top box
sold at retail is included in CE manufacturers. Our management feels this
classification is preferable as it allows a better association between service
provider revenue and digital households deploying a Company-provided IPG or an
IPG deployed under a patent license with the Company.CE manufacturers deploy such Company
products and services as Connected Platform, TV Guide On Screen, Guide
Plus+,G-GUIDE, VCR Plus+,
web services, LASSO and
Tapestry. Service providers deploy such Company products and servicesas Passport Echo, Passport DCT, Passport, i-Guide and web
services. Other includes
our business of licensing our extensive database of descriptive information
about television, movie, music and game contentandour entertainment company content
protection products and services such as ACP, RipGuard, CopyBlockand BD+.




On May 2,
2008, we acquired Gemstar-TV Guide International, Inc. (“Gemstar”) and on April
30, 2009, we acquired substantially all of the operations of Muze, Inc.
(“Muze”).  Our results of operations include the operations of Gemstar
and Muze from those dates forward.





On April 1, 2008, we sold our software
and games businesses (referred to as “Software” and “Games”,
respectively).  In November 2008 we sold our RightCommerce (also known
as “eMeta”) business.  In December 2008 we sold our TV Guide Magazine
business.  In January 2009 we sold our TVG




- 21
-
 
  Network business and in February 2009 we
sold our TV Guide Network and TV Guide Online businesses.  Together TV
Guide Magazine, TVG Network, TV Guide Network and TV Guide Online are
collectively referred to as the “Media Properties”.  The results of
operations andcash
flowsof Software, Games,
eMeta and the Media Properties have been classified as discontinued operations
for all periods presented (See Note 3 to the Condensed Consolidated
Financial Statements).





Results
of Operations








The following tables present our
condensed consolidated statements of operations for our continuing operations
compared to the prior year (in thousands).




Three Months
      EndedJune 30,2009
                                                              
                                                              2008
                                                              
                                                              Change $
                                                              
                                                              Change %Revenues:Service
      providers
                                                              $        58,587
                                                              
                                                              $        30,747
                                                              
                                                              27,840
                                                              
                                                              91%CE
      manufacturers
                                                              47,938
                                                              
                                                              30,592
                                                              
                                                              17,346
                                                              
                                                              57%Other
                                                              12,953
                                                              
                                                              11,715
                                                              
                                                              1,238
                                                              
                                                              11%Total
      revenues
                                                              119,478
                                                              
                                                              73,054
                                                              
                                                              46,424
                                                              
                                                              64%Costs and
      expenses:Cost of
      revenues
                                                              15,294
                                                              
                                                              12,585
                                                              
                                                              2,709
                                                              
                                                              22%Research and
      development
                                                              23,009
                                                              
                                                              16,952
                                                              
                                                              6,057
                                                              
                                                              36%Selling, general and
      administrative
                                                              32,248
                                                              
                                                              30,572
                                                              
                                                              1,676
                                                              
                                                              5%Depreciation
                                                              4,482
                                                              
                                                              3,653
                                                              
                                                              829
                                                              
                                                              23%Amortization
                                                              20,403
                                                              
                                                              15,033
                                                              
                                                              5,370
                                                              
                                                              36%Restructuring and asset
      impairment charges
                                                              45,648
                                                              
                                                              -
                                                              
                                                              45,648
                                                              
                                                              NATotal operating
      expenses
                                                              141,084
                                                              
                                                              78,795
                                                              
                                                              62,289
                                                              
                                                              79%Operating loss from continuing
      operations
                                                              (21,606)
                                                              
                                                              (5,741)
                                                              
                                                              (15,865)
                                                              
                                                              276%Interest
      expense
                                                              (13,589)
                                                              
                                                              (13,424)
                                                              
                                                              (165)
                                                              
                                                              1%Interest income and other,
      net
                                                              1,370
                                                              
                                                              2,493
                                                              
                                                              (1,123)
                                                              
                                                              -45%Loss from continuing operations
      before taxes
                                                              (33,825)
                                                              
                                                              (16,672)
                                                              
                                                              (17,153)
                                                              
                                                              103%Income tax
      benefit
                                                              (31,854)
                                                              
                                                              (5,867)
                                                              
                                                              (25,987)
                                                              
                                                              443%Loss from continuing operations,
      net of tax
                                                              (1,971)
                                                              
                                                              (10,805)
                                                              
                                                              8,834
                                                              
                                                              -82%(Loss) income from discontinued
      operations, net of tax
                                                              (171)
                                                              
                                                              95,458
                                                              
                                                              (95,629)
                                                              
                                                              -100%Net (loss)
      income
                                                              $        (2,142)
                                                              
                                                              $        84,653
                                                              
                                                              (86,795)
                                                              
                                                              -103%




- 22
-




Six Months
      EndedJune 30,2009
                                                                
                                                                2008
                                                                
                                                                Change $
                                                                
                                                                Change %Revenues:Service
      providers
                                                                $     111,020
                                                                
                                                                $        32,392
                                                                
                                                                78,628
                                                                
                                                                243%CE
      manufacturers
                                                                94,424
                                                                
                                                                47,768
                                                                
                                                                46,656
                                                                
                                                                98%Other
                                                                25,192
                                                                
                                                                23,189
                                                                
                                                                2,003
                                                                
                                                                9%Total
      revenues
                                                                230,636
                                                                
                                                                103,349
                                                                
                                                                127,287
                                                                
                                                                123%Costs and
      expenses:Cost of
      revenues
                                                                30,464
                                                                
                                                                16,518
                                                                
                                                                13,946
                                                                
                                                                84%Research and
      development
                                                                46,033
                                                                
                                                                22,025
                                                                
                                                                24,008
                                                                
                                                                109%Selling, general and
      administrative
                                                                64,379
                                                                
                                                                45,240
                                                                
                                                                19,139
                                                                
                                                                42%Depreciation
                                                                9,031
                                                                
                                                                4,457
                                                                
                                                                4,574
                                                                
                                                                103%Amortization
                                                                40,662
                                                                
                                                                18,098
                                                                
                                                                22,564
                                                                
                                                                125%Restructuring and asset
      impairment charges
                                                                53,619
                                                                
                                                                -
                                                                
                                                                53,619
                                                                
                                                                NATotal operating
      expenses
                                                                244,188
                                                                
                                                                106,338
                                                                
                                                                137,850
                                                                
                                                                130%Operating loss from continuing
      operations
                                                                (13,552)
                                                                
                                                                (2,989)
                                                                
                                                                (10,563)
                                                                
                                                                353%Interest
      expense
                                                                (31,167)
                                                                
                                                                (17,442)
                                                                
                                                                (13,725)
                                                                
                                                                79%Interest income and other,
      net
                                                                2,825
                                                                
                                                                8,099
                                                                
                                                                (5,274)
                                                                
                                                                -65%Gain on strategic
      investments
                                                                -
                                                                
                                                                5,238
                                                                
                                                                (5,238)
                                                                
                                                                -100%Loss from continuing operations
      before taxes
                                                                (41,894)
                                                                
                                                                (7,094)
                                                                
                                                                (34,800)
                                                                
                                                                491%Income tax
      benefit
                                                                (34,578)
                                                                
                                                                (3,711)
                                                                
                                                                (30,867)
                                                                
                                                                832%Loss from continuing operations,
      net of tax
                                                                (7,316)
                                                                
                                                                (3,383)
                                                                
                                                                (3,933)
                                                                
                                                                116%(Loss) income from discontinued
      operations, net of tax
                                                                (36,341)
                                                                
                                                                93,066
                                                                
                                                                (129,407)
                                                                
                                                                -139%Net (loss)
      income
                                                                $      (43,657)
                                                                
                                                                $        89,683
                                                                
                                                                (133,340)
                                                                
                                                                -149%


Revenues





Service
Providers





For the
three and six months ended June 30, 2009, revenue from the sale of our products
to service providers increased significantly compared to the same period in the
prior year.  This was largely due to including revenue from products
and services we obtained in the Gemstar acquisition.  We expect
revenue from the licensing of our IPG products and patents to grow in the future
from digital growth domestically and from our expanding licensing program
internationally.





CE
Manufacturers





For the
three and six months ended June 30, 2009, revenue from the sale of our products
and licensing of our patents to CE manufacturers increased significantly
compared to the same period in the prior year. This was largely due to including
revenue from products and services we obtained in the Gemstar
acquisition.  We expect revenue from the licensing of our IPG products
and patents to grow in the future primarily driven by new license agreements and
an increase in sales of CE devices incorporating our products or
patents.





Other





Other
consists primarily of the licensing of our content protection technologies to
entertainment companies and the licensing of our underlying media
content/metadata.  For the three and six months ended June 30, 2009,
Other increased compared to the same periods in the prior year primarily due to
increased




- 23
-
 
  revenue
from our data business, primarily driven by the Muze acquisition, partially
offset by a decline in our content protection revenues from entertainment
studios.





Cost of Revenues





For the
three and six months ended June 30, 2009, cost of revenues increased from the
same periods in the prior year, primarily due to additional costs associated
with products and services acquired in the Gemstar acquisition.





Research
and Development





For the
three and six months ended June 30, 2009, research and development expenses
increased from the same periods in the prior year primarily due to additional
research and development activities related to the Gemstar
operations.





Selling,
General and Administrative





For the
three and six months ended June 30, 2009, selling, general and administrative
expenses increased from the same periods in the prior year, primarily due to
additional costs associated with the Gemstar operations.





Depreciation
and amortization





Depreciation
and amortization increased from the same periods in the prior year primarily due
to the depreciation of fixed assets and amortization of intangible assets from
the Gemstar acquisition.





Restructuring
and asset impairment charges





During
the three months ended June 30, 2009, we completed extensive consumer research
regarding our brands.  This consumer research indicated that the
brands acquired by us do not represent the future vision of the Company and do
not carry a positive connotation in the market.  We determined these
results to be an indicator of potential impairment of our trademark intangible
assets.  We determined the fair value of our trademark and intangible
assets to be $8.3 million and recorded a $43.1 million impairment charge during
the three months ended June 30, 2009.  See Note 7 to the Condensed
Consolidated Financial Statements.  In addition, during the three
months ended June 30, 2009, we recorded $0.9 million in restructuring charges
related to the Muze acquisition and $1.6 million in other asset impairment
charges.





In
conjunction with the disposition of the Media Properties, in the first quarter
of 2009, our management approved several actions resulting in a restructuring
and asset impairment charge of $8.4 million.  Additionally, during the
first quarter of 2009 we reversed the remaining $0.4 million in liabilities
related to the Fiscal 2007 Restructuring Plans.  See Note 9 to the
Condensed Consolidated Financial Statements.





Interest Expense





Interest
expense for the three months ended June 30, 2009, was flat when compared to the
same period in the prior year as the reduction in interest expense associated
with the decline in average debt outstanding was offset by $1.2 million in
accelerated amortization of note issuance costs due to the payment of $50
million in principal related to the our Term Loan.  Interest expense
for the six months ended June 30, 2009, increased when compared to the same
period in the prior year primarily due to the debt issued to finance the Gemstar
acquisition.  Interest expense for the six months ended June 30, 2009,
included $3.2 million in accelerated amortization of note issuance costs related
to the pay down of $290 million in




- 24
-
 
 
  principal
related to the Term Loan in the first six months of 2009.  See Note 4
to the Condensed Consolidated Financial Statements.





Interest Income and Other,
Net





Interest
income and other, net decreased from the same periods in the prior year due to
lower prevailing interest rates and lower average cash and investment
balances.





Gain on strategic
investments





During
the first quarter of 2008 we recognized a gain of $5.2 million on the sale of
our investment in Digimarc Corporation.





Income Taxes





We
recorded an income tax benefit from continuing operations of $31.9 million and
$5.9 million for the second quarters of 2009 and 2008, respectively. We recorded
an income tax benefit from continuing operations of $34.6 million and $3.7
million for the six months ended June 30, 2009 and 2008, respectively. 
We
revised our full year projected results from operations during the quarter,
primarily due to the $43.1 million trademark and intangible assets impairment
charge recorded during the three months ended June 30, 2009.  The result
was an increase in income tax benefit which needed to be recorded during the
three months ended June 30, 2009, in order to reflect the appropriate income tax
benefit for the six months ended June 30, 2009, based upon the revised full-year
forecast.  Our effective tax rate also benefited from the rate differential
on our foreign operations.The income tax benefit for the six
months ended June 30, 2009, also includes a discrete tax benefit of $1.9 million
resulting from the enactment of a California tax law change during the first
quarter which reduced the balance of deferred tax liabilities expected to be
paid in 2011 and years thereafter.





Discontinued
Operations





Loss from discontinued operations for
the six months ended June 30, 2009, is primarily due to income tax expense
recorded for the sale of TVG Network, TV Guide Network and TV Guide
Online.





Income from discontinued operations for
the three and six months ended June 30, 2008, is primarily due to the gain on
sale recorded when we sold our Software business.





Costs
and Expenses





Cost of
revenues consists primarily of service costs, patent prosecution, patent
maintenance and patent litigation costs.  Research and development
expenses are comprised primarily of employee compensation and benefits,
consulting costs, a 49% share of the Guideworks LLC joint venture and an
allocation of overhead and facilities costs.  The 49% share of the
Guideworks LLC joint venture is accounted for as an operating expense in
accordance with SFAS No. 68, Research and Development
Arrangements.Selling and marketing expenses are comprised
primarily of employee compensation and benefits, travel, advertising and an
allocation of overhead and facilities costs.  General and
administrative expenses are comprised primarily of employee compensation and
benefits, travel, accounting, tax and corporate legal fees and an allocation of
overhead and facilities costs.





Critical
Accounting Policies and Use of Estimates





The
discussion and analysis of our financial condition and results of operations are
based upon our Condensed Consolidated Financial Statements.  These
Condensed Consolidated Financial Statements have been prepared in accordance
with the rules and regulations of the Securities and Exchange
Commission.  The preparation of these financial statements requires
management to make estimates and judgments that affect the reported amounts of
assets, liabilities, revenues and expenses, and related disclosure of contingent




- 25
-
 
  assets
and liabilities.  On an on-going basis, we evaluate our estimates,
including those related to revenue recognition, allowance for doubtful accounts,
equity-based compensation, goodwill and intangible assets, impairment of long
lived assets and income taxes.  Our estimates are based on historical
experience and on various other assumptions that are believed to be reasonable
under the circumstances.  Actual results may differ from these
estimates.





There
have been no significant changes in our critical accounting policies during the
six months ended June 30, 2009, as compared to those disclosed in our Annual
Report on Form 10-K for the year ended December 31, 2008.





Liquidity
and Capital Resources





Operations
are financed primarily from cash generated by operations. Continuing operating
activities provided net cash of $54.6 million and $2.3 million in the six months
ended June 30, 2009 and 2008, respectively.  Cash provided by
operating activities increased from the prior period primarily due to the
Gemstar acquisition.  The availability of cash generated by operations
in the future could be affected by other business risks including, but not
limited to, those factors set forth under the caption “Risk Factors” contained
in our Annual Report on Form 10-K.





Net cash
provided by investing activities from continuing operations for the six months
ended June 30, 2009, was $202.5 million and included $266.2 million in cash
received from the sale of the Media Properties, partially offset by $36.8
million of this cash being classified as restricted (see below), $6.9 million in
capital expenditures and $24.8 million used to acquire Muze and a music metadata
distribution business in the Asia Pacific region.  Included in the
2008 investing activities were $910.7 million cash used for Gemstar acquisition
and $184.0 million cash received from the sale of Software and Games. We anticipate that capital expenditures
to support the growth of our business and strengthen our operations
infrastructure will be between $15 million and $20 millionfor the full year in2009.





Net cash
used in financing activities from continuing operations was $285.0 million for
the six months ended June 30, 2009, primarily due to us making $240.0 million in
debt payments, as required under the terms of our five year senior secured term loan
credit facility (“Term Loan”), from the Media Properties net sales
proceeds.  We also voluntarily repaid $50 million on our Term Loan.
Included in the 2008 financing activities was $615.5 million in proceeds from
the issuance of debt, net of issuance costs, which was used to fund the Gemstar
acquisition.





Included
on our balance sheet at June 30, 2009, is $36.8 million in restricted
cash.  As part of the sale of TV Guide Network and TV Guide Online, we
deposited this cash in an escrow account in the event the buyer has an
indemnifiable claim.  The cash remaining in the escrow account will be
released to us in May 2010.





In connection with the Gemstar
acquisition,weentered intoand fully drew-down the$550 millionTerm Loan. As ofJune30, 2009, $257.2million was outstanding.The Term Loan is guaranteed by ourdomestic subsidiaries, and the assets
and sharesof
ourdomestic subsidiaries
are pledged as collateral against the Term Loan. We arerequired to use the proceeds from asset
sales of $75 million or more to pay down the Term Loan; proceeds from assets
sales of less than $75 million may be retained for investment in fixed or
capital assets.





Wemay elect to pay intereston the Term Loan at a rate of
(i) Libor plus 3.75%,
witha Libor floor of 3.5% or (ii) the Term
Loan administrative agent’s prime rateplus 2.75%.The Term Loan includes customary
covenants, including total leverage ratio limits, fixed charge coverage minimums
and restrictions on
additional debt incurrence
and dividend payments among others. As ofJune30, 2009, we werein compliance with the Term Loan debt
covenants.





- 26
-




In the event (i) ourleverage ratio is greater than 2.5 to
1.0, and (ii) more than $50 million in aggregate principal amount of the
2.625% convertible senior notes due 2011 (the “Convertible
Notes”)is still
outstanding, and (iii) the scheduled maturity of such
Convertible Notes is more
than 181 days in the future, then our Term Loan will become due on that 182nd
day prior to thematurity dateof such Convertible Notes.





In connection with theGemstar acquisition weissued $100 million of 11% senior notes
(the“11%Senior Notes”) due 2013.On August 5, 2009, the
Company redeemed the $100 million 11% Senior Notes at par plus accrued interest
and a $2.8 million make-whole payment representing the discounted value of
interest which the note holders would have received through November 15, 2009,
the first date the 11% Senior Notes could be retired without a
premium.





In August 2006 we issued
$240.0 million in Convertible Notes whichmay be converted, under certain
circumstances described below, based on an initial conversion rate of 35.3571
shares of common stock per $1,000 principal amount of notes (which represents an
initial conversion price of approximately $28.28 per share).





Prior to
June 15, 2011, holders may convert their Convertible Notes into cash and
our common stock, at the applicable conversion rate, under any of the following
circumstances: (i) during any fiscal quarter after the calendar quarter
ending September 30, 2006, if the last reported sale price of our common
stock for at least 20 trading days during the 30 consecutive trading days ending
on the last trading day of the immediately preceding calendar quarter is greater
than or equal to 120% of the applicable conversion price in effect on the last
trading day of the immediately preceding fiscal quarter; (ii) during the
five business-day period after any ten consecutive trading-day period (the
“measurement period”) in which the trading price per note for each day of such
measurement period was less than 98% of the product of the last reported sale
price of our common stock and the conversion rate on each such day; or
(iii) upon the occurrence of specified corporate transactions, as defined
in the indenture. From June 15, 2011 until the close of business on the
scheduled trading day immediately preceding the maturity date of August 15,
2011, holders may convert their Convertible Notes into cash and shares of our
common stock, if any, at the applicable conversion rate, at any time, regardless
of the foregoing circumstances.





Upon conversion, a holder will receive
the conversion value of the Convertible Notes converted equal to the conversion
rate multiplied by the volume weighted average price of ourcommon stock during a specified period
following the conversion date. The conversion value of each Convertible Note
will be paid in: (i) cash equal to the lesser of the principal amount of
the Convertible Note or the conversion value, as defined, and (ii) to the
extent the conversion value exceeds the principal amount of the Convertible
Note, a combination of common stock and cash. In addition, upon a fundamental
change at any time, as defined, the holders may require
usto repurchase for cash
all or a portion of their Convertible Notes upon a “designated event” at a price
equal to 100% of the principal amount of the Convertible Notes being repurchased
plus accrued and unpaid interest, if any.





In
September 2007 the Board of Directors of Macrovision Corporation authorized a
stock repurchase program, which allows us to purchase up to $60.0 million of our
common stock in the open market from time to time at prevailing market prices or
otherwise, as conditions warrant.  On May 5, 2008, our Board of
Directors reconfirmed this stock purchase program. During the fourth quarter of 2008 werepurchased 2.3 million shares of
common stock for approximately $25.1 million. These repurchases were recorded as
treasury stock and resulted in a reduction of stockholders’ equity. As ofJune30, 2009, treasury stock consisted of
2.3 million shares of common stock that had been repurchased, with a cost
basis of approximately $25.1 million.




- 27
-





As ofJune30, 2009, we had $172.0million in cash and cash equivalents,
$138.2million in short-term investments,
$21.0million in long-term marketable
securities and $36.8 million in restricted cash.





As
of June 30, 2009, we held auction rate securities with a fair value of
$70.9 million and par value of $79.4 million. Our auction rate securities
portfolio is solely comprised of AAA rated federally insured student loans and
municipal and educational authority bonds. However, the auction rate securities
we hold have failed to trade at recent auctions due to insufficient bids from
buyers. This limits the short-term liquidity of these instruments and may limit
our ability to liquidate and fully recover the carrying value of our auction
rate securities if we needed to convert some or all to cash in the near term.
Included in the above are auction
rate securities acquired through UBS AG with a par value of $62.3million. In December 2008 weentered into an agreement with UBS AG which provides
(i) usthe right to
sell these auction rate securities back toUBS AG at par, at oursole discretion, anytime during the
period from June 30, 2010 through July 2, 2012, and (ii) UBS AG the right to purchase
these auction rate securities or sell them onourbehalf at par anytime through
July 2, 2012.





We
believe that based upon our current other cash and cash equivalent balances, the
current lack of liquidity in the auction rate securities market will not have a
material impact on our liquidity or our ability to fund our
operations.





Webelieve thatour current cash, cash equivalents and
marketable securities and our annualcash flow from operations will be
sufficient to meet our working capital, capital expenditure and debt
requirements for the foreseeable future.





Discontinued
Operations





The
collective results from all discontinued operations were as follows (in
thousands):




Three Months
      Ended
                                                      
                                                      Six Months
      EndedJune 30,
                                                      
                                                      June 30,2009
                                                      
                                                      2008
                                                      
                                                      2009
                                                      
                                                      2008Net
revenue:Software
                                                      $    
           -
                                                      
                                                      $   
               -
                                                      
                                                      $         
            -
                                                      
                                                      $  27,352Games
                                                      -
                                                      
                                                      -
                                                      
                                                      -
                                                      
                                                      1,627eMeta
                                                      -
                                                      
                                                      1,968
                                                      
                                                      -
                                                      
                                                      3,912TV
      Guide Magazine
                                                      -
                                                      
                                                      19,777
                                                      
                                                      -
                                                      
                                                      19,777TV
      Guide Network / TV Guide Online
                                                      -
                                                      
                                                      21,663
                                                      
                                                      18,363
                                                      
                                                      21,663TVG
      Network
                                                      -
                                                      
                                                      8,834
                                                      
                                                      4,562
                                                      
                                                      8,834Pre-tax (loss)
      income:Software
                                                      $   
            -
                                                      
                                                      $  (8,222)
                                                      
                                                      $          
           -
                                                      
                                                      $  (6,865)Games
                                                      -
                                                      
                                                      -
                                                      
                                                      -
                                                      
                                                      (2,551)eMeta
                                                      -
                                                      
                                                      (1,656)
                                                      
                                                      -
                                                      
                                                      (3,545)TV Guide
      Magazine
                                                      
                                                      
                                                      (1,671)
                                                      
                                                      
                                                      
                                                      (1,671)TV
      Guide Network/TV Guide Online
                                                      
                                                      
                                                      2,218
                                                      
                                                      1,825
                                                      
                                                      2,218TVG
      Network
                                                      -
                                                      
                                                      (1,073)
                                                      
                                                      (694)
                                                      
                                                      (1,073)Pre-tax (loss) gain on disposal of
      business units
                                                      (193)
                                                      
                                                      151,284
                                                      
                                                      (3,661)
                                                      
                                                      151,284Income tax benefit
      (expense)
                                                      22
                                                      
                                                      (45,422)
                                                      
                                                      (33,811)
                                                      
                                                      (44,731)(Loss) income
      from discontinued operations, net of tax
                                                      $    (171)
                                                      
                                                      $    95,458
                                                      
                                                      $   (36,341)
                                                      
                                                      $     93,066






Our
Software business focused on independent software vendors and enterprise IT
departments with solutions including: the FLEXnet suite of electronic license
management, electronic license delivery




- 28
-
 
  and
software asset management products; InstallShield and other installer products;
and AdminStudio software packaging tools.  The sale of our Software
business closed in April 2008.





Our Games
business focused on providing tools and services needed to facilitate the
digital distribution of providers of digital goods.  The sale of our
Games business closed in April 2008.





eMeta provided software solutions that
enable companies to manage and sell digital goods and services
online.The sale
of eMeta closed in November 2008.





TV GuideMagazine’s weeklypublication wascentered on TV-related news, feature
stories, TV celebrity photos, behind-the-scenes coverage, reviews and
recommendations and national television listings.The sale of TV Guide Magazine
closed in December
2008.





TVG Network generated revenue primarily
from wagering and licensing fees.The sale of TVG Network closed in
January 2009.





TV Guide Network /TV Guide Online generated revenue
primarily from advertising and carriage fees. The sale ofourTV GuideNetwork /TV Guide Onlineclosed in February2009.





Impact
of Recently Issued Accounting Standards





See Notes
4, 5 and 12 to the Consolidated Financial Statements for a full description of
recent accounting pronouncements, including the anticipated dates of adoption
and the effects on our Consolidated Financial Statements.





Item
3.Quantitativeand Qualitative Disclosures about Market
Risk





We are
exposed to financial market risks, including changes in interest rates, foreign
currency exchange rates and security investments.  Changes in these
factors may cause fluctuations in our earnings and cash flows.  We
evaluate and manage the exposure to these market risks as follows:





Fixed Income
Investments:  We have an investment portfolio of money market
funds and fixed income securities, including those classified as cash
equivalents, short-term investments and long-term marketable investment
securities of $323.4 million as of June 30, 2009.  Most of these
securities are subject to interest rate fluctuations.  An increase in
interest rates could adversely affect the market value of our fixed income
securities while a decrease in interest rates could adversely affect the amount
of interest income we receive.





Our investment portfolio consists
principally of investment grade municipal bonds, money market mutual funds,
U.S. Treasury and agency securities, corporate bonds, commercial paper and
auction rate securities. We regularly monitor the credit risk in our investment
portfolio and take appropriate measures to manage such risks prudently in
accordance with our investment policies.





As a
result of adverse conditions in the financial markets, auction rate securities
may present risks arising from liquidity and/or credit concerns. At June 30,
2009, the fair value of our auction rate securities portfolio totaled
approximately $70.9 million. Our auction rate securities portfolio is
comprised solely of AAA rated federally insured student loans, municipal and
educational authority bonds. The auction rate securities we hold have failed to
trade for over one year due to insufficient bids from buyers.  This
limits the short-term liquidity of these securities. Included in the aforementioned
securitiesare auction rate
securities acquired throughUBS AG with a par value of
$62.3million. In December 2008 weentered into an agreement with UBS AG which provides
(i) usthe right to
sell these auction rate securities back toUBS AG at par, at oursole discretion, anytime during the
period from June 30, 2010 through July 2, 2012, and
(ii) UBS AG the right
to purchase these auction rate securities or sell them on ourbehalf at par anytime




- 29
-
 
  through July 2, 2012.In addition, the credit
ratings of these investments may deteriorate and as a result the fair value of
these auction rate securities may decline and we may incur impairment charges in
connection with these securities which would adversely impact our earnings and
financial condition.





We do not
use derivative financial instruments in our investment portfolio to manage
interest rate risk.  We limit our exposure to interest rate and credit
risk, however, by establishing and strictly monitoring clear policies and
guidelines for our fixed income portfolios.  The primary objective of
these policies is to preserve principal while at the same time maximizing
yields, without significantly increasing risk.  A hypothetical 50
basis point increase in interest rates would result in a $0.2 million decrease
in the fair value of our fixed income available-for-sale securities as of June
30, 2009.





While we
cannot predict future market conditions or market liquidity, we believe that our
investment policies provide an appropriate means to manage the risks in our
investment portfolio.





Foreign Currency Exchange
Rates.  Due to our reliance on international and export sales,
we are subject to the risks of fluctuations in currency exchange
rates.  Because a substantial majority of our international and export
revenues, as well as expenses, are typically denominated in U.S. dollars,
fluctuations in currency exchange rates could cause our products to become
relatively more expensive to customers in a particular country, leading to a
reduction in sales or profitability in that country.  Many of our
subsidiaries operate in their local currency, which mitigates a portion of the
exposure related to the respective currency collected.





Convertible
Notes.On August 23, 2006, Macrovision Corporation issued
$240.0 million of Convertible Notes.  Subject to fulfillment of
certain conditions, these notes were initially convertible at a rate of 35.3571
shares of Macrovision Corporation’s common stock per $1,000 principal amount of
notes (equivalent to a conversion price of approximately $28.28 per share of
Macrovision Corporation’s common stock). In connection with the May 2, 2008,
acquisition of Gemstar, the Company assumed ownership of Macrovision
Corporation.  The Company, Macrovision Corporation and the Bank of New
York, as Trustee for the convertible note holders, executed a Supplemental
Indenture under which the notes become convertible into a number of shares of
the Company’s common stock to be determined in accordance with the Convertible
Debt Indenture dated August 23, 2006.  The conversion rate is subject
to adjustment if certain events occur. These notes bear interest at a rate of
2.625% per year. Interest on the notes have accrued from August 23, 2006.
Interest is payable semiannually in arrears on February 15 and August 15 of each
year.





Term Loan.On May
2, 2008, in connection with its acquisition of Gemstar, the Company and
Macrovision Corporation, as co-obligors, entered into the Term Loan facility and
drew down $550 million. In the event (i) the Company’s leverage ratio is greater
than 2.5 to 1.0, (ii) more than $50 million in aggregate principal amount of the
Convertible Notes due 2011 is still outstanding, and (iii) the scheduled
maturity of the Convertible Notes due 2011 is more than 181 days in the future,
then the Term Loan will become due on that 182nd day prior to the Convertible
Notes maturity date.





11% Senior
Notes.On May 2, 2008, in connection with its acquisition of
Gemstar, the Company issued $100.0 million of 11% Senior
Notes.   On August 5, 2009, the Company redeemed the $100 million
11% Senior Notes at par plus accrued interest and a $2.8 million make-whole
payment representing the discounted value of interest which the note holders
would have received through November 15, 2009, the first date the 11% Senior
Notes could be retired without a premium.





- 30
-




Item
4.  Controls
and Procedures





Evaluation of Disclosure Controls
and Procedures.  As of the end of the period covered by this report,
we carried out an evaluation, under the supervision and with participation of
management, including our Chief Executive Officer and our Chief Financial
Officer, of the effectiveness of the design and operation of our disclosure
controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the
Exchange Act).  In evaluating the disclosure controls and procedures,
management recognizes that any controls and procedures, no matter how well
designed and operated, can provide only reasonable assurance of achieving the
desired control objectives, and management necessarily is required to apply its
judgment in evaluating the cost-benefit relationship of possible controls and
procedures.  Based on their evaluation, our Chief Executive Officer and
Chief Financial Officer concluded that our disclosure controls and procedures
were effective as of the end of the period covered by this report.





Changes in Internal Controls over
Financial Reporting.    During the quarter ended June
30, 2009, there have been no changes in our internal control over financial
reporting that have materially affected, or are reasonably likely to materially
affect, these controls.




- 31
-







PART
II.  OTHER INFORMATION


Item 1.  Legal Proceedings







The Company isinvolved in legal proceedings related to
intellectual property rights and other matters. The following legal
proceedings includethose
of the Companyand its
subsidiaries.





Indemnifications





In April 2005 Gemstar received a notice
of a potential claim for indemnification from DirecTVGroup, Inc. (“DirecTV”)as a result of a lawsuit filed by
Finisar Corporation (“Finisar”) against DirecTV in the United States District
Court for the Eastern District of Texas. Finisar alleged that several
aspects of the DirecTV satellite transmission
system, including aspects of its advanced electronic program
guide (“EPG”) and the storage, scheduling, and transmission of data for the
EPG, infringed a Finisar patent. On July 7, 2006, the Court awarded Finisar
approximately $117 million. In addition, the Court ordered DirecTV to pay
approximately $1.60 per activated set top box in licensing fees going
forward in lieu of an injunction until the expiration of Finisar’s patent in
2012.  The parties both filed appeals to the Federal Circuit, whichsubsequently ruled that the trial court's construction of certain terms
of the patent was too broad, vacated the jury's verdict of infringement, held
that one of the seven patent claims at issue is invalid, and left standing the
remaining six claims for reconsideration by the trial court. The appeals court
also reversed the jury's finding that DirecTV's infringement was
willful.  The trial court subsequently ruled in DirecTV’s favor on its
summary judgment motion that the remaining claims of the subject patent were
invalid.  The Company has not established a reserve with respect to
this matter in its consolidated
financial statements.





Comcast Cable Communications Corp.,
LLC v. Finisar Corporation, in the United States District Court for the
Northern District of California.  In support of a potential claim for
indemnification, Comcast Cable Communications Corp., LLC (“Comcast”) put the
Company on notice that it had received communications from Finisar
asserting infringement of U.S. Patent 5,404,505 (the “‘505 patent”). On
July 7, 2006, Comcast filed a declaratory judgment action in the Northern
District of California asking the Court to rule, among other things, that it
does not infringe the ‘505 patent and/or that the patent is invalid.   On
May 15, 2008, Finisar entered into a covenant and stipulation with Comcast,
filed with the California Court, that it would not assert any claim of the ‘505
patent against Comcast or certain related entities, other than claim
25.  On July 11, 2008, the Court ruled on Comcast’s summary judgment
motion, finding that claim 25 is invalid, and therefore finding that Comcast’s
non-infringement motion is moot.  Comcast has not taken any further
action insofar as its potential indemnity claim against the Company is
concerned.





Other
Litigation





Thomson, Inc. v.
Gemstar—TV Guide
International, Inc., in the
Superior Court of the State ofIndianafor theCountyofHamilton. On May 23, 2008, Thomson, Inc. (“Thomson”) initiated this action, seeking, among
other things, indemnification from the Company in connection with its settlement of the patent claims
against it inSuperGuide
Corporation v. DirecTV Enterprises, Inc., et al., in the United States District Court for the
Western District of North Carolina. Thomson alleges that it entered into
multiple agreements with the Company between 1996 and 2003 that would require
the Company to indemnify Thomson in theSuperGuidelitigation. Specifically, Thomson asserts causes of action
for fraud/fraudulent inducement, breach of contract, breach of implied in fact
indemnity and warranty of title against infringement, and unjust
enrichment. Thomson seeks a declaration from the Court that the Companyowes Thomson defense and indemnity for
SuperGuide’s claims, compensatory damages,
including fees and expenses paid by Thomson in that case, the return of
royalties paid by Thomson to the Company under the aforementioned agreements,
pre and post-judgment interest, punitive damages, attorney fees,
and costs of suit.  The case is set for trialat a date to be determined in
2010.









DIRECTV, Inc. v.
Gemstar-TV Guide Interactive, Inc., American Arbitration Association -
Los Angeles.  On March 20, 2009, DIRECTV, Inc. (“DIRECTV”) filed this
arbitration demand seeking indemnity for payments made in settlement of two
patent infringement lawsuits, including the SuperGuide Corporation v. DirecTV
Enterprises, Inc., et al.matter.  DIRECTV seeks
indemnity under the November 21, 2003, License and Distribution Agreement and
Patent License Agreement between the parties and claims damages plus interest
and its arbitration-related attorneys’ fees.  The Company has filed a
Response and Counterclaim for breach of contract.   A hearing
date has been set for December 7, 2009.





In addition to the items listed
above, the
Companyis party to various
legal actions, claims and proceedings as well as other actions, claims and
proceedings incidental to
its business. The Companyhas established loss provisions only for matters in which losses are probable
and can be reasonably estimated. Some of the matters pending against the
Companyinvolve potential
compensatory, punitive or treble damage claims, or sanctions, that if granted,
could require them to pay damages or make other expenditures in amounts that
could have a material adverse effect on their financial position or results of
operations. At this time management has not reached a determination that the matterslisted above or anyother litigation, individually or in the
aggregate,are expected to
result in liabilities that will have a material adverse effect on our financial
position or results of operations or cash flows.





Item 1A.  Risk Factors





A description of the risk factors
associated with our business is included under “Risk Factors” contained in Item
1A of our Annual Report on Form 10-K for the period ended December 31, 2008, and
is incorporated herein by reference.  There have been no material
changes in our risk factors since the filing of our last Annual
Report.





Item 2.  Unregistered Sales of Equity Securities
and Use of Proceeds





None.





Item 3.Defaults Upon Senior
Securities





None.


Item 4. Submission of Matters to a Vote of Security
Holders





None.





Item 5.  Other Information





None.








- 33
-










Item 6. Exhibits





Incorporated
      by ReferenceExhibit
                              Number
                            
                            Exhibit
      Description
                            
                            Form
                            
                            Date
                            
                            Number
                            
                            Filed
      Herewith3.01
                            
                            Certificate of Incorporation of
      Rovi Corporation, as amended on July 15, 2009
                            
                            
                            
                            
                            
                            
                            
                            X31.01
                            
                            Certificationof the Chief ExecutiveOfficer pursuant to Securities
      Exchange Act Rules 13a-15(e) and 15d-15(e) as adopted pursuant to Section
      302 of the Sarbanes-Oxley Act of 2002.
                            
                            
                            
                            
                            
                            
                            
                            X31.02
                            
                            Certification of the Principal
      Financial Officer pursuant to Securities Exchange Act Rules 13a-15(e) and
      15d-15(e) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
      2002.
                            
                            
                            
                            
                            
                            
                            
                            X32.01
                            
                            Certification of the Chief
      Executive Officer pursuant to 18 U.S.C Section 1350, as adopted pursuant
      to Section 906 of the Sarbanes-Oxley Act of 2002.
                            
                            
                            
                            
                            
                            
                            
                            X32.02
                            
                            Certification of the Principal
      Financial Officer pursuant to 18 U.S.C Section 1350, as adopted pursuant
      to Section 906 of the Sarbanes-Oxley Act of 2002.
                            
                            
                            
                            
                            
                            
                            
                            X












- 34
-




SIGNATURES








Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.








Rovi
Corporation


Authorized
Officer:




Date:
                                                            August 6, 2009
                                                            By:
                                                            /s/ 
      Alfred J. AmorosoAlfred
      J. AmorosoChief
      Executive OfficerPrincipal Financial
      Officer:Date:
                                                            August 6, 2009
                                                            By:
                                                            /s/
      James BudgeJames
      BudgeChief
      Financial OfficerPrincipal
      Accounting Officer:Date:
                                                            August 6, 2009
                                                            By:
                                                            /s/
      Peter C. HaltPeter
      C. HaltChief
      Accounting Officer