Does Barry Diller have the Midas touch?

NEW YORK -- Is Barry Diller creating the entertainment studio of the future?Diller, the architect behind Fox Television, has struck again.

NEW YORK -- Is Barry Diller creating the entertainment studio of the future?

Diller, the architect behind Fox Television, has struck again. Through his own company, Home Shopping Network, he has bought most of Universal Studio's television operations for $4.1 billion in stock and cash.

The deal -- which came out of the blue -- brings together an unusual combination of media assets: USA Networks, a huge entertainment cable network, shows like "Hercules" and "Xena," 12 small TV stations, the Home Shopping Network, and HSN's half-stake in Ticketmaster.

If he can pull it off, Diller could fashion a media empire that could amuse audiences over cable and broadcast television, sell them baubles and toasters over the air, and convince them to buy tickets over the phone -- all through one company. That's a powerful combination.

Edgar Bronfman, Jr., president of beverage company Seagram, which owns Universal, said in an interview he believes that Diller can create a new kind of media company that would tie together different areas of commerce and entertainment.

"We think we're trying to do something that hasn't been done before," Bronfman said. The current studio model comprises television networks, cable, film and perhaps music -- but online services play at best a walk-on role.

Despite the potential of Diller's new empire, there are many in the media industry who believe the former Fox TV Wunderkind and Paramount Pictures executive has more ambitious plans. They say his ultimate goal is to own a broadcast television network, with the likeliest candidate being CBS. Diller begs to differ.

"That speculation would be foolish," he said in an interview. "There is a great deal on the plate today. We have cable program networks, 25 stations and controlling stake in Ticketmaster. We have a rather significant business in electronic retailing and electronic commerce. That is not to say an acquisition in the future will be out of our sights. This the step."

No one knows yet where the gold lies in the new company, but there are many important assets to be explored. One of the least appreciated aspects of the new media colossus is the unglamorous fulfillment operations -- the back-office people who ship goods to consumers for HSN. That could provide a powerful engine to fuel the growth of electronic commerce.

"One thing Diller has gone crazy about is the enormous capacity HSN has for fulfillment, said Alan Snyder, president of Snyder Capital Management, which owns more than 1 million HSN shares. The fulfillment can benefit "AOL, electronic trading, telephone answering or shipping -- anybody who does anything with electronic commerce."

Despite the skeptics, there's no doubt Barry still has electronic commerce on the brain. Just days after sewing up the Universal deal, he put in an offer to buy out the rest of Ticketmaster.


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