Barry Diller USA Networks in talks to acquire 4 cable networks

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Barry Diller's USA Networks is in talks to acquire four national cable networks, according to executives familiar with the discussions.

The channels--American Movie Classics, Bravo, Independent Film Channel and Romance Classics--are owned by Rainbow Media Holdings, a division of Cablevision Systems Corp. General Electric's NBC also owns 25% of Rainbow.

Cablevision is said to be interested in selling the channels to concentrate on its local program services, which include the company's three New York-area channels, collectively known as MSG Metro.

The asking price for the national networks could exceed $2 billion.

"It's a deal Barry is very interested in, but he's been sidetracked lately by the Lycos deal," said one of the executives familiar with the discussions.

SHAREHOLDER REACTION MIXED

Reaction by Lycos shareholders to the proposed USA Networks takeover of the Internet company--a deal worth $22 billion when announced earlier this month--has been mixed, and Mr. Diller is focusing on making sure that acquisition goes through.

A spokeswoman for Mr. Diller said he would not comment on acquisitions under consideration.

In an interview in The New York Times a bigger largest of the four channels and seen in 69 million homes, is expected to bring in revenue of $171 million this year, a Kagan researcher said. AMC recently started running ads before and after selected films.

The four networks combined will have estimated total revenue of about $317 million in 1999, according to Kagan.

AD PACKAGES COMING

As USA Networks builds its cable holdings, it will be able to develop ad packages for advertisers.

However, cautioned one executive, "The demographics of USA, Sci-Fi, AMC and Bravo seem pretty different to me. . . . Using [Diller's] Home Shopping channel and its infrastructure to sell videos and other merchandise related to the networks would be one winning idea."

Mr. Diller has put in his own programming team at USA Networks, "and I'm sure he would do something Dilleresque with these other cable networks if he gets them," said one of the executives familiar with the talks, adding, "That's his magic, what he's known for."

Copyright February 1999, Crain Communications Inc.

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