Diller Muses Over His Lost Rainbow

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USA Networks Inc. chairman Barry Diller last week told analysts that his much-publicized bid for Rainbow Media Group Inc. came down to one simple factor-price.

During the keynote speech at last week's Bear Stearns & Co. Inc. investment media conference in Boca Raton, Fla., Diller didn't reveal the price he was asked to pay. But he did say it was too high for his taste.

"Rainbow we looked at, we stretched as hard as we could, and in the end we said we can't do it," Diller said. "We wanted it so badly-and we did, it would have been great for us-but we couldn't do it. We could have gotten the money together, but we couldn't do it."

Rainbow Media Group is the programming arm of Cablevision Systems Corp. and includes the cable channels Bravo, American Film Classics, Independent Film Channel, WE: Women's Entertainment and MuchMusic USA. In January, Cablevision took Rainbow off the block.

Instead, Cablevision opted to sell a 20-percent non-voting stake in four Rainbow networks-Bravo, AMC, IFC and WE-to Metro-Goldwyn Mayer Inc. for $825 million.

A tracking stock for RMG-which will include the four networks, MuchMusic and interests in several national sports networks-is scheduled for later this month.

Diller said the fight for Rainbow at times was pretty contentious-even within his own ranks.

"There were people in my company that said: 'Screw the next buy. We promise you, at the price plus $500 million, in 10 years it will be worth it,'" Diller said. "They made very powerful arguments. But in the end we said, 'We've got to live with it and it's not the last deal.'"

Diller still laments the big one that got away: Paramount Communications Inc. Viacom Inc. won a spirited contest for Paramount in 1994, paying $10.1 billion.

"I wish I had done Paramount," Diller said. "There are many reasons why and the most important of which is that, in the very end, it was simply a miscalculation. It was worth it."