Diller Plots Post-Kay USA

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With USA Networks founder and CEO Kay Koplovitz gone,
programming maestro Barry Diller can aggressively move forward, putting his stamp on USA
Network and the Sci-Fi Channel.

While Koplovitz's resignation last week has been
anticipated, the entertainment industry was left speculating as to what extent Diller will
clean house at USA.

Diller, chairman and CEO of USA Networks Inc., is known as
a hands-on micromanager who considers his bailiwick to be programming. Ultimately, that
may not bode well for the future of both Rod Perth, president of entertainment for USA
Networks, and Barry Schulman, Sci-Fi's vice president of programming.

"They're her [Koplovitz's] team," said one
programming analyst.

Diller, who couldn't be reached for comment last week, has
taken over direct control of USA and Sci-Fi. In an interview with The Wall Street
Journal
, he said he does not plan to replace Koplovitz, a cable pioneer who founded
USA 21 years ago and built it into a ratings leader and multibillion dollar asset.

"Kay is leaving at the top of her game," said
Decker Anstrom, president and CEO of the National Cable Television Association, where
Koplovitz is a board member.

Koplovitz, who did only limited press interviews last week,
has been negotiating her departure from USA for some time. She told the Los Angeles
Times
, "It's Barry's company now, and Barry needs to do what he wants with
it."

Koplovitz is slated to remain at USA through an unspecified
transition period. In a prepared statement, she was vague about her plans, including
potential ventures with Diller.

"I have decided to do more of what I love best --
building businesses," she said. "I'm in discussions with Barry and others about
the possibility of creating and leading new ventures both inside and outside USA
Networks."

Koplovitz's resignation comes several months after Diller's
$4.1 billion HSN Inc. deal to acquire USA Networks, which was completed in February. His
company is now renamed USA Networks Inc., and includes Home Shopping Network, his TV
station group, Ticketmaster Group Inc. and Universal Studio's domestic TV operations as
well as the two cable outlets.

Since the deal was announced, industry pundits questioned
how long Koplovitz and Diller, both known as strong-willed executives, would remain under
the same corporate roof. Nonetheless, internally USA staffers had thought everything had
settled down since the sale, and were reportedly shocked to be told of Koplovitz's exit
via company e-mail last week, sources said.

Perth could have a better chance of surviving because of
USA's recent programming successes. The network was No. 1 in the primetime ratings in the
first quarter, and scored a ratings bonanza with its miniseries Moby Dick. And
during the past year, USA has made ratings strides and won critical acclaim for original
shows such as La Femme Nikita.

But USA has long been criticized for failing to craft a
sharply defined identity and brand, in terms of both its programming and consumer image,
which is one reason why USA senior vice president of marketing Andrew Besch is expected to
be among those Diller replaces. Douglas Holloway, executive vice president of network
distribution and affiliate relations, is expected to make Diller's cut.

If Diller does decide to replace Koplovitz, Nations Banc
Montgomery Securities LLC analyst John Tinker said Diller has a good track record of
bringing in talented people and predicted he would find someone outside "the usual
names that are bandied about."

Bill Carroll, vice president and director of programming
for the Katz Television Group, expects Diller -- who launched the Fox Network -- to take
the strategy of first airing programming on USA and then putting it on his TV stations.

"The stations are the perfect place for a back-end of
off-cable product, Carroll said.

Koplovitz, under a longtime difficult and changing
dual-ownership structure, built USA into a huge general entertainment network with 72
million subscribers. USA for some time was jointly owned by MCA Inc. and Paramount
Communications. Then Seagram Co.'s Universal Studios and Viacom Inc. took ownership, when
they bought MCA and Paramount, respectively. Viacom and Seagram/Universal had a court
battle over USA, and Seagram/Universal eventually bought out Viacom. Diller then bought
out Universal.

Koplovitz launched Sci-Fi in 1992, and its distribituion is
at a sizable 48 million homes.

"She [Koplovitz] deserves unbelievable credit for what
she did in the early days of cable in growing USA," said Geraldine Laybourne,
president of Disney/ABC Cable Networks and architect of Nickelodeon.

Koplovitz in 1977 started the Madison Square Garden
Network, where she was the first to negotiate national cable rights to major league
sports, including Major League Baseball and the National Basketball Association. She
evolved that all-sports network into USA as a general entertainment network.

"She took an idea and turned it into a powerhouse of
sports and entertainment," said NBA commissioner David Stern, who as general counsel
negotiated the NBA's deal with Koplovitz in the late 1970s.

Koplovitz has been active in cable-industry affairs,
especially through her involvement with the NCTA. Anstrom credited Koplovitz with helping
programmers and cable operators to reach a consensus on the so-called
"going-forward" rules relating to the Cable Act.

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