Diller, Barry Charles

(1942-)
USA Networks Inc.

Overview

Barry Diller is the quintessential risk–taker who sees (and seizes) opportunities before his rivals do, and creates media empires in an already competitive market. The American public may best recognize him for his role in creating the nation's fourth network known as Fox Television (the Fox Broadcasting Company) alongside the powerhouses of ABC, NBC, and CBS. Fox changed television viewing forever with the debut of spike–haired cartoon character Bart Simpson, as well as the then–controversial sitcom, Married With Children, and the very successful Cheers. He is also credited with playing a role in the creation of made–for–TV movies, "movie of the week" specials, and TV miniseries. But those things are passé for Diller, who bought USA Networks in 1998, a conglomerate which owns the Home Shopping Network and Ticketmaster Online. Diller's long–term goal is to create a true convergence network: combining the Internet with telephone and television—a concept that has been around since the early 1980s but one that has never enjoyed a stronghold in the media world.

Personal Life

Diller was born in San Francisco to Michael and Reva (Addison) Diller in 1942. His father, who ran a real estate company, moved the family to Beverly Hills when Barry was still a boy. He grew up with Danny Thomas and Doris Day, among others, as neighbors.

In 1961, at the age of nineteen, Diller dropped out of college at the University of California, Los Angeles (UCLA) after only four months, and took a job in the mailroom at the William Morris Agency. After completing a training program, he became a full talent scout for the Agency in 1964. This turned out to be his yellow brick road into Hollywood. According to Newsmakers 1991, because of a business strategy "defined by the characteristics of risk–taking, creative decision–making, and tight control over financial strategies, Barry Diller has risen to become one of the most powerful studio managers in Hollywood. Couple that with his personality traits of bluntness, cunning, and intimidation, and you have the essence of Diller." Little has changed from that description in the ten years since, excepting Diller's exodus from Hollywood to New York.

In 2001, the 59–year–old Diller was riding high on a wave of network successes, and always looking to make a new deal. He continues to share his time between a sprawling five–acre Spanish–style estate in Coldwater Canyon, a beach house in Malibu, and a suite in Manhattan's Waldorf Towers. He loves to hike, bike, and play poker—in a long standing game that includes Steve Martin, Johnny Carson, Carl Reiner, Neil Simon, and producer Dan Melnick. He takes annual bicycle trips with Disney CEO Michael Eisner. He plays hard, drives fast, and skis even faster. His long–time friend, Jack Nicholson, told an interviewer for Los Angeles Magazine that Diller was "as good as it gets..." Previously a confirmed bachelor, Diller finally married in February 2001 to fashion designer Diane Von Furstenberg in a five-minute ceremony at New York's City Hall. They had been romantically linked for the previous 26 years.

Notwithstanding an aggressive style and personality, Diller typically does not seek the limelight and has refused many groups' requests to honor him with special awards. However, he and former Universal chairman Sidney Sheinberg created the nonprofit group, Hollywood Supports, in 1991, to fight HIV discrimination and homophobia in the entertainment industry and to secure domestic–partner benefits for more than 90 percent of the industry's gay employees. Diller serves on the board of directors for Ticketmaster, Seagram Co. Ltd., the New York Public Library, the Museum of Television and Radio, and the Washington Post. He is a board member for the School of Cinema–Television at the University of Southern California and the Executive Board for the Medical Sciences at UCLA, both the New York University's Board of Trustees and the Tisch School of the Arts Dean's Council, and a member of the Advisory Board for the Center for Health Communications at Harvard University's School of Public Health.

Career Details

Shortly after becoming a talent agent for William Morris in his early twenties, Diller joined ABC in 1966, serving as assistant to the vice president of programming. Two years later, he became executive assistant to the vice president of programming and directing of feature films. Diller was named vice president of feature films and program development for the East Coast in 1969. From 1971 to 1973, he served as vice president of feature films and Circle Entertainment, during which time he was responsible for selecting, producing, and scheduling the Tuesday Movie of the Week, Wednesday Movie of the Week, and Circle Film original features for airing on ABC, as well as acquisition and scheduling of theatrical features for airing on the ABC Sunday Night Movie and the ABC Monday Night Movie. In 1973, Diller was named vice president of Prime Time Television at ABC Entertainment.

Diller was named chairman and chief executive officer of Paramount Pictures in 1974, serving as chairman for ten years. He next served as president of Gulf and Western Entertainment and Communications Group from 1983 to 1984. In 1984, Diller joined with Rupert Murdoch to develop Fox into the fourth TV network, when the industry said there was only room for the Big Three. Diller served as chairman and CEO of Twentieth Century Fox Film Corporation and TCF Holdings from 1984 to 1985, and chairman and CEO of Fox Inc. from 1985 to 1992.

Diller stunned Hollywood in 1992 when he unexpectedly resigned as chairman of Fox, walking away with an estimated $140 million. He had decided that if he did not make the big leap then, he may never do it. He gave himself one year to travel around the country looking for opportunities. After six months, von Furstenberg took him with her to witness TV shopping on the Pennsylvania–based home–shopping network known as QVC. He was immediately hooked after watching her sell $1.2 million worth of merchandise in less than two hours. Laying down $25 million, Diller took over as CEO of QVC Network Inc.—a position he held until 1994. Using QVC as leverage, Diller next attempted to take over control of Paramount Communications in 1993, but Viacom trumped QVC's bid and Diller moved on. He again lost a bid for CBS, which Westinghouse took over in 1994. Undaunted, Diller sold his stake in QVC for another $100 million, then turned around and seized control of QVC's Saint Petersburg, Florida rival, the Home Shopping Network (HSN). He also seized Silver King Communications—a group of 12 UHF stations, and the flailing Savoy Pictures Entertainment, which had stakes in several more stations.

Buoyed by his new acquisitions, Diller, through HSN, began Internet investing with Ticketmaster and CitySearch, a network of city–based informational Web sites, as well as an Internet shopping site called First Auction. Diller served as CEO of QVC Network Inc. from 1992 to 1994, chairman and CEO of Silver King Communications Inc. from 1995 to 1998, and chairman of the Home Shopping Network from 1995 to 1998. At that time, a new promise appeared on the horizon.

Back in 1995, Seagram's Bronfman had purchased Universal Studios from Matsushita. Two years later, just prior to committing Universal to buy out Viacom's 50 percent share of USA Network, Bronfman invited Diller to dinner and proposed a deal. The complicated details involved Diller's agreement to have HSN buy Universal's cable networks (which included both USA and its sister Sci–Fi Channel) and the TV production arm for $4.1 billion in cash and stock. While Universal would retain a 45 percent stake in the new company—to be called USA Networks Inc., Diller would run it as CEO and chairman of the board. Essentially, the deal gave Diller a large chunk of Universal to merge with his existing local channels. This would allow him to create a cable–broadcast hybrid of local broadcast television stations and Universal's national broadcast television production facilities, along with the Home Shopping Network. Diller's vision was to build a national television network of locally made programming from grassroots neighborhoods on up. His concept included the construction of 13 production facilities in different cities over the ensuing three years (the first opened in Miami). So great was the excitement over Diller's new vision that USA Network Inc.'s share price more than doubled within the year.

Chronology: Barry Charles Diller

1942: Born in San Francisco.

1961: Dropped out of UCLA after four months to become mail clerk at the William Morris Agency.

1966: Joined ABC as assistant to the vice president of programming.

1969: Promoted to vice president of feature films and program development for the East Coast.

1973: Named vice president, prime time television, at ABC Entertainment.

1974: Named chairman and CEO of Paramount Pictures.

1983: Served as president of Gulf and Western Entertainment and Communications.

1984: Named chairman and CEO of Twentieth Century Fox Film Corporation.

1995: Became chairman of Home Shopping Network and CEO of Silver King Communications.

1998: Named chairman and CEO of USA Networks Inc.

Despite the subsequent failure of a proposed deal to merge with Internet portal Lycos (by purchasing 61.5 percent of Lycos stock) to use it as an Internet outlet for HSN and Ticketmaster direct marketing , and an August 2001 reassignment by cable powerhouse AOL Time Warner from Channel 23 to Channel 40 on several systems, USA Network Inc. has done very well. For the first half of 2001, the company reported near 20 percent increase in revenues, to $2.7 billion, and a 13 percent increase in operating income, to $157.4 million. USA shares were up 30 percent.

Moreover, since 1999, Diller has struck more than 30 separate deals to purchase Internet sites, call centers, and warehouses—all intended to create the backbone for the media world of his vision, one which is driven by the interactive sale of goods and services. Diller neared the end of 2001 with a debt–free balance sheet and $2 billion in cash, making no secret that he was searching for his next major media property purchase.

Social and Economic Impact

Barry Diller is not the most powerful or the wealthiest person in the American media business, but he has enjoyed the distinction of having been the most watched. He changed network television forever when he played a major role in forcing the Big Three networks (ABC, CBS, NBC) to move over and make room for a fourth. Additionally, the new network's programming, albeit controversial and on–the–edge by some standards (e.g., the Jerry Springer Show), offered a refreshing viewing alternative to the non–cable network audience.

But it is Diller's plan for the future that holds the most interest. Although he is neither the creator nor the prophet of the concept of convergence in the media (television, telephone, and computer), he and his company may be the ones most watched for the concept's ultimate success. To understand the concept at work, one only need look to Diller's July 2001 deal with the Professional Golf Association as a convergence showcase. In the deal, USA Network will broadcast the early rounds of many PGA events through 2007. USA's Ticketmaster will sell the tickets to the events, and USA's e–commerce group will operate PGA.com, which will sell everything from golf shirts to sporting equipment, housed at (and delivered from) the Home Shopping Network warehouses. Already in 2001, USA networks units were running online commerce sites for the National Football League, the National Basketball Association, and Sportsline.

If Diller is correct, persons may eventually need to venture out of their cocoons only rarely for shopping or entertainment purposes. In July 2001, USA Network purchased Microsoft's online travel site, Expedia Inc.—making Diller the Internet's largest travel agent. With Expedia, Diller hopes to create what may be the media world's first fully functioning convergence entity. His soon–to–debut USA Travel cable channel, his Hotel Reservations Network Inc. Internet site, and his newly acquired Expedia should bring USA Network up to third place (behind Amazon and Priceline) in e–commerce business. If one tosses in a traveler's interest in attending events while traveling, Ticketmaster will handle the transaction online, and if one is looking for a travel partner, he or she can visit USA's dating service, match.com. The impressive array of transaction assets that Diller and USA Networks Inc. have assembled may serve to set Diller up as the revenue role model in the convergence market, with no known competition close behind.

Sources of Information

Contact at: USA Networks Inc.
152 W. 52nd St.
New York, NY 10019
Business Phone: (212) 314–7300
URL: http://www.usanetwork.com

Bibliography

"Barry Diller." 24 November 2001. Available at http://www.usanetworks.com/people/diller.html.

"Barry Diller leaves home: could a new network built on local programming threaten Hollywood's hold on the television industry?" The Economist, 2 May 1998.

Glasner, Joanna. "Meet Barry Diller, Net Mogul." 9 February 1999. Available at http://www.wired.com/news/business.

Kilday, Gregg. "Mr. USA." Los Angeles Magazine, March 1998.

"Monitor." Entertainment Weekly, 16 February 2001.

"Resume: Barry Diller." 10 September 2001. Available at http://www.businessweek.com/magazine.

"The New Barry Diller." 10 September 2001. Available at http://www.businessweek.com/magazine.