Diller Touts USAs TV-Cable Hybrid


New York -- USA Networks Inc. chairman Barry Diller last
week sought to allay any concerns on Wall Street about what he dubs his
"contextualized commerce" strategy or about possible acquisitions.

"We had an idea in our head from the very beginning,
and the idea was interactivity," including electronic commerce, Diller said during
the "PaineWebber Media Conference '99" here.

After four years of "assembling the pieces," he
added, "now we have all the pieces," and USA has begun implementing its
strategy. Along with cable networks and broadcast stations, the assets include
Ticketmaster and Citysearch.com.

Diller also restated his desire to own more cable networks
and broadcast stations, and he said he hadn't overpaid for assets in the past and he won't
in the future. "We've got a tremendous balance sheet," Diller added, citing $700
million in cash flow and "essentially no debt."

Diller also brought up various criticisms from unidentified
critics who have dismissed his company -- which now bills itself as "a diversified
media and electronic-commerce company" -- as "a big hodgepodge" and
"disparate assets" lacking synergy.

In his view, Diller said, USA represents a
"convergence of information, entertainment and direct selling" that spans both
new Internet-based media and "proven media" -- his preferred term for "old
media" like broadcasting and cable.

Both he and USA Networks president Barry Baker pointed out
that the company has what Diller called "huge scale in terms of fulfilling
orders," led by Home Shopping Network and Ticketmaster.

Instead of staying "vertical," a la HSN, Diller
said, USA has begun going "horizontal" across its various broadcast and cable
outlets. With a blend of content and e-commerce, Baker said, USA now sells merchandise on
such programs as the USA Daily Special and the Daily Sports Source (on Fox,
which shares the revenue).

Men usually aren't prime home shopping buyers, but they do
go for so-called short-shopping shows, such as the local Cleveland Browns Stadium
special, which recently generated $200,000 in one hour for team
merchandise, Baker added.

Another facet in USA's "broadcast-cable hybrid"
is multipurposed programming. In today's fragmented environment, Diller observed,
"The only way you're going to get an audience is to [accumulate] one."

USA's first such instance is Law &Order:
Special Victims Unit
, which USA's distribution arm supplies to NBC; each episode is
rerun 10 days later on USA late-night. And five other multipurposing projects are "in
development with various networks."

Baker said USA would buy or launch new cable networks
"at a price we can live with," but he offered no new details. He also said USA
Broadcasting wants more stations.

Diller said USA is also "talking to all of the usual
suspects" about partnering in TV stations. Moreover, HSN plans a major expansion in
Europe and Italy next year, he added.