Does Barry Diller want to become a Web mogul?

Summary:Does cable TV tycoon Barry Diller now want to become an Internet mogul?Earlier Thursday, CitySearch Inc.

Does cable TV tycoon Barry Diller now want to become an Internet mogul?

Earlier Thursday, CitySearch Inc. and Ticketmaster Online, which is part of Diller's USA Networks empire, announced plans to merge and form a single company. USA Networks also controls the Sci-Fi Channel, the Home Shopping Network, a collection of local TV stations and the Internet Shopping Network, whose primary service is First Auction, a Web-based auction site. CitySearch, on the other hand, is a network of city guides, which focuses on reaping local advertising and providing editorial guides to shopping and entertainment. It competes with local papers and other online city guides, such as Microsoft Corp.'s Sidewalk and America Online Inc.'s Digital City.

Despite his wide holdings, Diller has remained at arm's length from the Internet business. But some observers believe the pending merger with CitySearch could foreshadow renewed interest in e-commerce from a man who knows a thing or two about selling stuff.

'You find an event on CitySearch, and you immediately can buy the ticket. The question is, does the Ticketmaster aspect just become invisible?'
--Clay Ryder, Zona Research analyst.

At the most basic level, Ticketmaster, a seller of tickets for local events, makes a good match with CitySearch, which helps people find out about local events.

"You're pairing a buying system with a directory for buying," said analyst Clay Ryder of Zona Research Inc. "There's some direct follow on that, some direct leverage. You find an event on CitySearch, and you immediately can buy the ticket. The question is, does the Ticketmaster aspect just become invisible? Does that other brand even need to be there?"

What does Barry want?
And with the pairing of Diller's local collection of TV stations, some compare the deal to the recent corporate media investments in Web portals, such as NBC's purchase of part of Snap! Online. The local stations could promote CitySearch as a localized Internet hub, and CitySearch, in turn, could promote Diller properties to Internet audiences.

"Diller has had aspirations of building a network of local TV stations, and that could be a tremendous source of promotions for CitySearch," said analyst Patrick Keane of Jupiter Communications. "With that site as part of Ticketmaster Online, it will be in Diller's best interests to promote CitySearch as a local online brand."

But USA Network did not buy CitySearch outright and some company watchers suggested that the combination of Ticketmaster Online and CitySearch did not presage a more aggressive move by Diller into cyberspace. They said the companies were pooling resources in an attempt to increase traffic and revenues.

Web advertising: A big plotz
The combined company might make for a better Wall Street debut than CitySearch would have on its own. The merger allows CitySearch to put off its own planned IPO, which would have occurred during a softened market for Internet stocks. "I've seen Diller smelling around the Internet for years now," said author Michael Wolff, who chronicled his experiences as Internet entrepreneur in his book "Burn Rate."

"It may be interesting that he's making a move here. It may portend larger things. Or it may just be a way to deal with the constant issues of how to build an Internet company," said Wolff.

He added that e-commerce now seems a more promising source of revenues than a business model, such as CitySearch's, which is based on Internet advertising. At the same time, Wolff indicated that Ticketmaster may be in need of the kind of extra traffic that CitySearch could provide.

"Advertising has turned out to be a big plotz," said Wolff. "It's very hard to begin to create a viable business model if you're dependent on advertising."

Topics: E-Commerce, Start-Ups

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