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Barry Diller taking over USA Network and other Universal TV businesses

October 20, 1997

NEW YORK (AP) _ Barry Diller gained control of two cable channels and an important tool for building his planned television network with a deal Monday to purchase most of Universal Studios’ TV business for $4.1 billion.

Diller’s HSN Inc., which already owns Home Shopping Network, will take over USA Network and Sci-Fi Network and rename the combined operation USA Networks Inc. HSN also gets Universal’s U.S. television production and distribution business, which includes ``Law & Order″ and ``Xena: Warrior Princess″ and could be a valuable source of programming.

``That should help catapult Mr. Diller’s plans,″ said Jill Krutick, an entertainment analyst at Smith Barney. ``It will allow him to ... dramatically fast-forward those endeavors.″

Diller, once the creative force behind the Fox network, owns a string of UHF stations in major cities through his Silver King Broadcasting unit. Diller envisions those stations _ now serving as carriers for Home Shopping Network _ as forming a network built on local news, entertainment and sports from each of its markets.

The first station to start its own programming will be in Miami next spring.

In the deal, Universal will gain a 45 percent stake in HSN, which also controls Ticketmaster Group Inc., and a $1.2 billion cash payment. The sale comes a month after Universal’s parent company, Seagram Co., bought sole control of USA Network from partner Viacom Inc. to end a lengthy legal battle.

Universal is also giving up 50 percent of USA Network’s international operations, but will retain the studio’s library of old television shows and its international TV production and distribution operations. The companies said they will each own half of a new international TV venture.

Seagram will benefit by turning its cable channels over to an experienced executive, while adding an interest in the Home Shopping Network to the beverage and media conglomerate’s holdings, Krutick said.

Investors in both companies cheered the deal. HSN shares were up $3.62 1/2 at $42.25 in afternoon trading on the Nasdaq Stock Market, while Seagram shares rose $3.06 1/4 to $35.50 on the New York Stock Exchange.

The companies told analysts they plan to gain sole control of Ticketmaster, although no timetable was given, Krutick said. HSN in July took a controlling stake in the world’s leading computerized ticketing service, two months after buying Microsoft Corp. co-founder Paul Allen’s 47.5 percent share.

HSN, based in St. Petersburg, Fla., was a pioneer in 24-hour televised shopping programs in 1982 and now reaches 70 million households. Diller took control of the company in late 1995.

The company’s Silver King unit owns and operates 12 UHF stations in 11 major markets and holds minority interests in stations in six major markets. HSN also owns SF Broadcasting, which owns and operates four VHF Fox affiliates.

Liberty Media Corp., which retained 20 percent of HSN after selling most of its stake to Diller, will have its stake shrink to 15 percent but will have the right to boost its stake to 25 percent. Liberty Media is the programming arm of giant cable operator Tele-Communications Inc.

Edgar Bronfman Jr., Seagram’s president and chief executive, and three other Universal representatives will join HSN’s board. Diller will become a Seagram director.