Waiting In The Wings

Barry Diller tried to plant himself backstage last week, far from the spotlight that focused on troubles in the world of Big Media. Vivendi, the French conglomerate that includes the Universal Entertainment division that Diller has run for two months, finally booted its CEO, Jean-Marie Messier, after his ambitious plan to remake a former water utility collapsed under the weight of staggering debt and a sinking stock price. Diller, spinning the turmoil back in Paris as the least of his concerns, appeared to be focusing instead on racing to the Hamptons behind the wheel of his convertible for the Fourth of July. He even seemed more attuned to how he was portrayed in the gossip columns than the business pages. He noted that he was wrongly described as hosting the likes of P. Diddy, Lizzie Grubman and Naomi Campbell for a celebration aboard a 100-foot yacht. "My yacht is bigger than that," he said to a friend. Never mind that these boldface names aren't his crowd, which tends more to the Titans of Industry set.

Despite his best efforts to keep a low profile, though, the spotlight in the Vivendi saga will inevitably fall on Diller. After all, he is, according to media-industry chatter, perfectly positioned to expand his empire if Vivendi decides to restructure and split off its entertainment division. Diller isn't saying whether he would be interested, which, according to the rules of negotiation, puts him precisely in the ideal position. It is, even at this juncture, a remarkable shift in the Diller story line. He's a media mogul who's famous for aggressively pursuing his goals. But now, by holding back, he may get what he wants--a chance to run an empire that encompasses entertainment, retail and the Internet.

Diller's success is owed in part to smart moves and, perhaps more important, moves he wisely and luckily didn't make. Although clearly ambitious--his drive enabled him to build the Fox network from scratch for Rupert Murdoch, for example--he was not among the moguls who formed a company like Vivendi or AOL Time Warner, whose broad, ambitious strategies have been called into question by skeptical investors. Diller (a director of The Washington Post Company, which owns NEWSWEEK) tried unsuccessfully to take over Paramount and CBS. But those failures, in a sense, helped lay the groundwork for his success.

Whether you know it or not, you likely do business with Diller. If you order a concert ticket online (Ticketmaster), buy a Pan Partner pancake maker from the Home Shopping Network or book a trip on Expedia.com, you're sending your credit-card number to Diller. Those businesses are part of USA Interactive, an expanding e-commerce giant that Diller controls as CEO. Few customers have given more to Diller, though, than Vivendi. In 1998 Diller acquired USA Networks and other television operations from Universal, then controlled by Edgar Bronfman Jr., head of the Seagram liquor company. It was such a bargain for Diller that it's often cited in entertainment and financial circles as one of Bronfman's dumbest deals: it apparently strained Bronfman and Diller's once close friendship. After Vivendi purchased Universal from Bronfman, Messier repurchased USA Networks from Diller for 2.5 times as much as Diller had paid for it. Messier agreed to pay Diller $275 million for no more than a year of serving as absentee chairman and CEO of a newly created joint venture, Vivendi-Universal Entertainment, while Diller continued his full-time job as boss of USA Interactive. It's a deal that, even if Diller were to call it quits now, would earn him a place in the mogul book of records.

But Diller's not the retiring type. And he could certainly lend Vivendi's new leadership a hand in figuring out what to do next. According to an executive at USA Interactive, Diller "will be generous" with suggestions if asked. He is determined, however, not to use his company to finance the acquisition of any Universal assets. Unlike the new top executives of Vivendi Universal, Diller could afford to sit back and relax over the holiday weekend, and let the spotlight come to him.