USA topper granted stock option bonanza
NEW YORK — USA Networks Inc. chairman Barry Diller took no salary or bonus last year, but the company did grant him another 9.5 million stock options, USA reported Monday in an SEC filing. The options are worth $66.5 million at USA’s current market price.USA, known until last month as HSN Inc., granted the options last October after Diller negotiated the company’s acquisition of domestic TV production units and the USA cable network from Seagram Co.’s Universal Studios for $4.075 billion in stock and cash. The options can be exercised at a price of $19.31 a share, compared with USA’s $26 Monday closing price . With these options included, Diller finished the year with 26.5 million options worth $323 million, though two-thirds of these options cannot be exercised immediately. Meanwhile, an improvement at the Home Shopping Network helped USA report a $3.3 million fourth quarter profit Mon-day, compared with a $5.4 million loss a year earlier. The earnings came as revenues rose 3.4% during the quarter ended Dec. 31, 1997, to $390.3 million. At an analyst meeting Monday, Diller said USA Networks’ evolving broadcast network would likely end up using a lot of TV programming produced by its Universal television operations, according to analysts present. In answer to a question, Diller said USA Network’s long-term plan was to become a “completely vertically integrated con-tent and distribution company.” USA’s fourth quarter brought earnings for the year to $10.8 million, compared with a loss of $19.1 million in 1996, as revenues climbed 4.4% to $1.5 billion. The numbers were adjusted for the timing of USA’s acquisition last July of a majority stake in Ticketmaster Group Inc. and its mergers with Savoy Entertainment and Home Shopping Network in December 1996. The company’s acquisition of USA Networks, which was completed in February, and its recent agreement to buy the out-standing public stock in Ticketmaster did not affect the quarter, however. USA attributed the fourth quarter increases to improvements in its core electronic retailing business and ticketing operations. It also reported that revenue gains would have been greater were it not for the closing of three retail outlets in early 1997 and for the planned reduction of its mail order catalog business. For its Home Shopping Network’s core electronic retailing business, which accounts for two-thirds of USA Networks’ total sales, revenues were up 8.1% to $967 million, unit sales were up 8.7% to 26.6 million, gross profit margins widened from 37.8% to 39.9% and the return rate dropped from 23.5% to 22.2%.