Barry Diller Still Believes - Company Business and Marketing

Industry Standard, The, July 30, 2001 by Kenneth Li

Besides the logistical challenges, Chao says, the program will test whether viewers expecting a full-fledged show will keep watching when it starts to resemble the Home Shopping Network. "The grand test is ... [whether] one can really play in selling ... and make entertainment that is uncompromised," Chao says. "That's the point of the Jackie 0 show."

While Chao works that out, Diller is thinking bigger: He wants to get in the ring with media giants like AOL Time Warner, Bertelsmann and Viacom. The Expedia transaction gives USA a powerful partner in Microsoft, a fierce AOL Time Warner rival that now has a vested interest in Diller's venture. USA's minority shareholder, Vivendi Universal, is also quietly plotting its global media strategy by taking a larger interest in U.S. market. Vivendi is sorely lacking in U.S. TV assets and may seek to leverage Diller's media prowess when the time comes. Diller, however, denies that he will play a larger role in Vivendi's North American media ambitions.

So how exactly will Diller take on the behemoths? "If it happens, it will happen at USA Networks," he says. "If it happens, it will be because we grow into a first-tier company -- either by internal growth or by acquisition." Sounds less like threat than a promise.

DILLER'S NEW AIR WAR TV MAY DECIDE WHO RULES ONLINE TRAVEL.

Do couch potatoes fly?

Barry Diller thinks so, and his foray into the $17 billion Internet travel industry is premised on a bet that cable television viewers will buy tickets online. His purchase of Expedia makes his USA Networks the first company to operate both a television show dedicated to travel and a full-service travel Web site.

That reach into America's living rooms gives Expedia a potential boost over its two largest rivals: Travelocity, the front-runner, and Orbitz, a recently launched consortium owned by the country's five largest airlines. All three acknowledge that media is going to play a huge role in winning market share, but they're pursuing very different strategies: USA is buying agencies, Travelocity is partnering with media giants, and Orbitz is doing an advertising blitz, While online travel sales are expected to grow 40 percent to $24 billion this year. that's still only 14 percent of the total travel market. With all that room for growth, travel sites are taking aim at winning over first-time Internet buyers.

Of the three big online travel agencies, Orbitz is the only one not strongly allied with a major media company. Travelocity has deals with AOL Time Warner and Yahoo. Even though Microsoft plan to sell its controlling stake in Expedia to Diller, Expedia will keep its links to Microsoft's MSN portal in addition to its new relationship with USA Networks.

Orbitz execs brush aside such media connections, noting that their site registered I million users and racked up $100 million in sales since its launch in June. Instead of partnering or merging with a media company, it's relying on a $200 million ad campaign. "We're attracting significant online travel virgins to Orbitz," says spokeswoman Carol jourzaitis.