Troubling Gerund Possesive

[GameShow]

A friend and I are having a bit of a discussion about the following sentence found in a report from work:
"This is due to the program's being new."
I contend that since the subject of the sentence is so obscure and wrapped in a preposition, the possesive is not needed.
He contends that a noun modified by a gerund phrase is always possesive.
Which of us is more correct?
Thanks in advance!
GameShow

[Coffa]

You are. Ask him whether he thinks the problem of luggage's being stolen from airports is less serious than people's being over-prescriptive about grammar rules?