Macrovision (MSVN) says that it will raise $800 million as part of the financing for its buy-out of Gemstar-TV Guide (GMST).

The market does not seem to like the debt or the deal. Macrovision shares are off 25% to $19.60 and hit  a 52-week low of $18.60 earlier in the day.

The Gemstar-TV Guide (GMST) shareholders are undoubtedly enraged. Shares in that company are down 25% to $4.47. They have a 52-week high of $7.28.

It is hard to see why many of the GMST shareholders would want to sell. Rupert Murdoch’s News Corp (NSW) is in favor of the deal and owns a control block of shares.

But, before a rough third quarter, shares of Gemstar were stepping up nicely. The had traded up as much as 120% on the year.

Gemstar should walk away. They probably won’t even have to pay a break-up fee.

Douglas A. McIntyre