Backtalk: Dillers Fastball


For years, folks have been wondering if Barry Diller, oncethe wunderkind of Hollywood, had truly lost his fastball, as he seemingly bounced from oneaimless pipe dream to another.

But apparently, Diller has been doing his homework andhoning his Internet savvy, just like others in the entertainment world who don't wantto become the next officially declared dinosaur in the headlines.

Indeed, last week, Diller found himself in the center ofthe fledgling, but most promising, world of e-commerce, marrying a traditionalentertainment network with an ultrahot Internet commodity.

He grabbed headlines and turned a lot of heads with theannouncement of the creation of USA/Lycos -- a mating that truly has the potential tomarry USA's Home Shopping Network, Diller's majority-controlled stake inTicketmaster and Lycos, the fourth largest Internet portal.

When the deal is completed, USA will wind up with about a61 percent stake in Lycos, valued by industry sources at some $18 billion to $20 billion.

In his announcement, Diller said he believed that he neededa national portal if his current company was going to continue to grow. And just think ofwhat Lycos adds to his portfolio.

First of all, he learned a lot during his short tenure atQVC about the cable home shopping business -- even if it wasn't how to win friendsand influence people.

But while he didn't last long at QVC, he soon managedto grab up HSN and a large stake in Ticketmaster, thus immersing himself in the growingworld of at-home transactional commerce.

This deal has the makings of a winner, especially when youlook at how quickly e-commerce has grown this year alone.

For example, shopping on the Internet grew at a logarithmicrate just from 1997's holiday season to last year's.

I've bought so many books now from that Iactually got a letter and Christmas mug from the company's president, thanking me formy business. That's a heck of a lot more than I ever got from my cable company for all ofthose checks that I've written over the past 15 years.

Obviously, I'm not the only one shopping until I droponline. And Diller is smart enough to see the potential of marrying his existing assetswith Lycos -- a deal that will allow him to cross-promote USA and, more important, HSN andTicketmaster to the huge audience that Lycos provides.

This is a truly new world. Diller already had thesubscriber fees and ad revenues, just like any other cable programmer does. Now, inaddition to the transactional revenue from HSN on cable, that merchandise will beavailable on the Web, and that's where the money is increasingly going to be spent.

Although Diller stated last week that this transaction waspretty much it, and that he had no interest in buying NBC or any other company, Iwouldn't be surprised to see him make a run at eBay Inc. If he doesn't, somebodyelse will, and he really is the most logical candidate, considering his current holdings.

After all, is one of the quickest-growing -- ifnot the quickest -- online auction sites. It boasts 600 million page views and 173 millionbids per month, all in its short time in existence.

Many can attest to the rush of slamming a bid in at thelast minute, with the clock ticking, and winning an auction. Users of eBay regularly jokeon the bulletin boards: "Does anyone know if Betty Ford has a 12-step program forthis new addiction?"

Clearly, the message in the new-media world is content,just like it has been in television and cable since the get-go.

And now that cable operators have entered this new arena,offering high-speed cable modems to their subscribers, they are going to find that speedis not enough. Like the core cable business that they understand, they are soon going tolearn that content is king on the Internet.

And the @Homes and Road Runners of this world are going tohave to offer much more compelling content in this world of demanding users. They may likethe speed of cable modems, but they want more.

But remember: What are they racing to find? Just askDiller, who just made one very smart move.