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The Nation | COLUMN ONE

Barry? The Guy Is Golden

Media mogul Diller, seen by many as Vivendi's best hope, has cultivated a reputation for genius despite his share of stumbles.

January 24, 2003|Michael Cieply and Richard Verrier | Times Staff Writers

A golden image is precious in an era when executives may live and die by the colorings of the media. Image can evaporate with a single stock trade: Witness the woes of Martha Stewart, when the government questioned her sale of shares in a friend's biotech firm.

Others might take a drubbing for even relatively slight miscues. Thus a firestorm greeted retired General Electric Co. Chairman Jack Welch last year when his corporate perks were disclosed in a bitter divorce battle.

And then there's Barry, the mogul who's so well known that he's on a first-name basis with Wall Street and Hollywood. During a career that has spanned two decades, Barry Diller has been at the center of some of the entertainment industry's most sensational and brutal deals, reputation beautifully intact. And never has the spotlight shone hotter on Diller than now, as he jockeys to sit atop Vivendi Universal's U.S. entertainment empire, which may be spun off into a separate company.

Diller is seen by many in the financial community as the only man who can rescue the star-crossed merger of Paris-based Vivendi, formerly a water utility, with some of the richest assets in show business -- Universal Studios.

That Diller, who only a few years ago was cobbling together his home-shopping business, is playing a leading role in the future of a global corporation 10 times the size of his own USA Interactive is surely a tribute to his business acumen. But there's more at work here.

Among his peers, Diller has been arguably the best at capitalizing on a reputation for deft brilliance, even while stumbling into his share of trouble. Indeed, Diller and his corporation have seen their sizable investment in Vivendi's U.S. entertainment group jeopardized by the French company's turmoil. One problem is the firm's massive debt, worsened when Diller sold Vivendi the same TV assets he bought from the company only a few years before for less than half the price. Universal employees are chafing under Diller-mandated cost cuts necessitated by that debt.

Vivendi shares have dropped nearly 70% during Diller's involvement to about $18 a share. Shares in USA Interactive, Diller's company, also are down more than 30% from their peak of last spring because of investor unease about some of USA Interactive's online operations and concern about Diller juggling jobs as head of USA Interactive and co-chief of the Universal entertainment group.

Still, he remains golden with many of those who control the flow of investment funds.

"He's considered a winner and a moneymaker for investors," said Dennis Leibowitz, a money manager with New York's Act II Partners, an investor in USA Interactive. "People don't know how much is luck and how much is brilliance."

Diller has weathered repeated career bumps and strategic reversals through skilled management of the media and, still more, by projecting a sense of destiny that seems to override questions about performance.

"I've made gargantuan mistakes," Diller said. "For me, luckily, none were a killer." One of those involved his words this month about business rival Marvin Davis, who is bidding for Vivendi's U.S. entertainment operation. At an investor conference, Diller called Davis a "fat man" who had as much chance as a luncheon waiter of succeeding in his bid. Diller later apologized for the remarks.

On more than one occasion, such withering barbs have been described as Socratic rather than abusive.

Diller-mania has become a volume business of late. A survey of the Nexis database, which compiles print and electronic sources, indicates that Diller was mentioned 2,139 times last year. That's more than triple what he logged in 1996, when the executive was struggling to combine his relatively modest broadcast and home-shopping operations into what was then known as HSN Inc.

Few would dispute that Diller has scored some stunning successes in a business career that began in the William Morris Agency's Beverly Hills mailroom in 1961.

A UCLA dropout, Diller worked his way through executive jobs at the ABC network, where he was credited with pioneering the movie of the week. Later, as chairman of Paramount Pictures, he rescued the studio with a string of hits including "Raiders of the Lost Ark" and "48 Hrs." He followed that by becoming the founder of the Fox network under Rupert Murdoch.

After leaving Fox in 1992, Diller became involved with the QVC home-shopping network, controlled by cable mogul John Malone. Again changing course, however, he soon assembled an e-commerce and media empire of his own around the rival Home Shopping Network and other properties. The resulting firm, USA Interactive, now has a stock value of $10.3 billion, and its revenue of $5.3 billion placed it at 329 on Fortune's 2002 list of the top 500 U.S. corporations.

"He understands better than anybody what might be the big idea for the decade -- the transaction potential of the Internet," Boston money manager Larry Haverty said.

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