USA Networks Inc. chairman Barry Diller said he would not object to Vivendi
Universal S.A. increasing its stake in his company as long as it proved to be
beneficial to his shareholders.
Speculation has been rampant for the past few months that Vivendi -- which
already has a 43 percent nonvoting stake in USA -- was negotiating to buy
Liberty Media Group's 20 percent interest in the company, increasing its share
of USA to 63 percent.
Diller, in a conference call with reporters, said he would not object to
Vivendi increasing its share in USA if it meant a sure path to substantial
growth. He quickly added that USA is growing at a rapid pace on its own.
'We want this company to grow,' he said. 'I have no issues as to what numeric
stake they own in the company.'
Diller, who has the right to veto any such deal, was quick to add that any
such transaction would not include voting control and would have to prove its
worthiness to shareholders.
'It will relate of course not to what's of interest to Vivendi, but what is
of interest to USA,' he added.
Cash flow at USA rose 14 percent and revenue was up 18 percent in the first
quarter, fueled by substantial growth at its cable networks.
Revenue at USA Network was up 10 percent to $216.8 million, and it was up 11
percent to $69.3 million at Sci Fi Channel. Cash-flow growth was 16 percent at
USA to $112.2 million and 23 percent to $29.7 million at Sci Fi.
USA reiterated its guidance for 2001 and 2002, projecting cash-flow growth of
25 percent annually. The company said it derives about 15 percent of revenue
from advertising, which could explain its growth despite the slow advertising
Contrary to his other media peers, Diller said he does not expect the
advertising market to rebound in the second half.
'There is no reason to think that there is going to be improvement,' Diller
said. 'I think it's going to be a tough environment for the foreseeable future,
and that goes beyond this year.'