NEW YORK — In an effort to make his myriad businesses more understandable to investors and executives alike, USA Networks boss Barry Diller will reshuffle the company’s operations into three primary divisions, with an eye toward taking at least one of them public in the future, the company announced Friday.
USA’s new units are information and services, entertainment and electronic retailing. Under the info and services banner will be one of the firm’s best performing arms, Ticketmaster, as well as a number of nascent e-commerce ventures such as Ticketmaster Online, urban guide portal CitySearch, matchmaking service Match.com and the Hotel Reservations Network.
Following the restructuring, USA said it will mull the possibility of an initial public offering for the unit. USA will also look into buying up more of the outstanding shares of Ticketmaster Online-CitySearch Inc. as part of a larger strategy “to retain significant equity stakes or increase its ownership positions in its public subsidiaries.”
An offer of new shares in a bundled information services group would allow investors to value substantially all of USA’s e-commerce properties as a group and potentially provide the parent company with a hefty chunk of new capital.
The e-commerce operations received substantial guidance from outgoing prexy and chief operating officer Barry Baker, but Diller said the new unit will be able to manage without him. “He said it best himself: The organizing work he did was the important thing,” Diller said in an interview.
The second new division, USA Entertainment, comprises most of the company’s most visible properties, including cabler the USA Network, the Sci-Fi Channel and its recently relaunched companion site, SciFi.com, as well as production arms Studios USA, USA Films and USA Broadcasting.
Finally, USA’s new electronic retailing unit will house the company’s fast-growing Home Shopping Network family of businesses, including the domestic network, its international doppelgangers and its online presence, HSN Interactive. According to a company release, these constituent businesses generated $1.4 billion in pro forma revenues last year.
USA, 42% owned by Seagram Co. (which recently agreed to sell itself to French conglom Vivendi), has grown by leaps and bounds over the past five years, making 15 acquisitions and swelling annual revenues to $4 billion from $500 million. Company’s stock, which trades on the Nasdaq, has increased from a split-adjusted $12 a share when it began trading in February 1998 to $23.50 at Friday’s close.
That performance was driven in large part by investors’ faith in the deal-making savvy of Diller, which offset their confusion over USA’s perplexing array of diverse media and commerce businesses. That, Diller said, is what he set out to change through this reorganization.
“We’re a very young enterprise, and we’ve grown really fast,” Diller said. Recently, however, “we felt we’d reached enough critical mass that we now could organize in such a way that would help explain the company, both internally and externally.”
Diller maintained that the restructuring had “absolutely zero” to do with the impending merger of Seagram and Vivendi. In fact, he said, the company had been racing to finish the reorganization before the merger announcement to avoid just such an assumption, but “Vivendi works really quickly.”