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Telecoms Media Technology: Meet the `daddy cool' of dot coms
Independent on Sunday, The, May 11, 2003 by Andrew Gumbel
It might seem foolhardy, to say the least, to declare that the dot- com industry is alive and well. But Barry Diller, the one-time Hollywood mogul turned visionary entrepreneur, is living proof that received wisdom can be deceptive.
He was in the interactive commerce business years even before the advent of the internet, and he stuck with it through the years of both e-boom and e-bust. At this point, his company, USA Interactive, boasts the highest sales figures of any e-commerce company, its $5.04bn (pounds 3.15bn) revenue for the past 12 months outstripping Amazon's $4.2bn and eBay's $1.5bn. Its market value, around $12.5bn, is still a fair way behind eBay's ($22bn), but ahead of Amazon and Yahoo!
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Although USA Interactive's holdings sound less than glamorous - they include home-shopping channels, online travel agency Expedia, accommodation booking service Hotels.com, online dating service Match.com and the sports and concert booking firm Ticketmaster - they have all proved solid business propositions in good times and bad.
And last week, Mr Diller branched out into online lending and mortgage services with the $734m acquisition of Lending-Tree, a North Carolina e-company that leads its customers to the best deals in the financial market. It expects $150m in revenue this year and a growth rate beyond that of as much as 40 per cent a year.
"This is probably the most strategic effort we've put down in a year or two," Mr Diller told an analysts' conference call. And that may be an understatement: his company now controls as much as 75 per cent of the online market (excluding porn). Only a handful of people on the Forbes list of the richest Americans still make their money from the internet, but Mr Diller is one of them.
Tina Brown, the former editor of Vanity Fair and as good a bellwether of what is fashionable in the US media as you get, has come out as a big Diller fan. Launching her new TV show, Topic [A], a week ago, she called him "the daddy cool of business" and "the king of entertainment", while noting that he came out of the dot-com boom "extremely well".
Like all visionaries, Mr Diller has had his share of abuse. When he first became interested in home shopping networks a decade ago, his former colleagues in the entertainment industry thought he had lost it. A few years later, when he refused to pay more than a 2 per cent premium on the market valuation of Lycos, the internet portal, he was told in a meeting he was "old media" and just didn't get it. (The deal fell through, and in retrospect Mr Diller now feels he's better off without an internet portal anyway, because it gives him greater leverage to strike deals with Lycos's competitors.)
Then again, one of Mr Diller's great strengths is to have been repeatedly underestimated. Over the years, he has out-Eisnered Michael Eisner and out-Murdoched Rupert Murdoch. Thanks to his company's close involvement with many of Vivendi Universal's entertainment assets, he managed to extract maximum advantage from the collapse of Vivendi's dream of becoming a transatlantic media conglomerate - while avoiding any significant fallout from the French giant's mounting burden of debt and corporate humiliation.
It is still not clear where Vivendi's main interests in film, television, music and theme parks will end up, but it is clear that whoever wants to buy them will have to do so on terms laid down by Mr Diller. (He even served, for several months after the departure of chief executive Jean- Marie Messier, as chairman of Vivendi Universal Entertainment, a job most people would regard as a full plate but which for Mr Diller, was just a side interest.)
What is his secret? He has argued that he has no grand vision. He hates the word "visionary", especially when applied to him, and says he merely moves in directions that happen to interest him. He does, however, admit to one moment of epiphany when he first observed the operations of the QVC home-shopping channel in Philadelphia back in 1992.
"I watched a little screen and when there were a lot of phone calls, a lot of transactions taking place, the bars would rise and then they would recede. It was like waves. It was kind of a wild experience," he told Wired magazine recently. "I thought, `This is going to change things.' I did not know how or where or why, but I knew that interactivity at scale, which was what I was watching, was going to be powerful."
At the time, Mr Diller had just left Hollywood after a remarkable 20- year career, first as the head of Paramount during its crucial transition from Coppola to Spielberg - from the golden age of American directors to the new world of heavily merchandised blockbusters - and then as the man who built up a brand new US television network, Fox, on behalf of Rupert Murdoch. He quit Fox after disagreeing with Mr Murdoch about what sort of content should be on the network. Mr Diller launched The Simpsons and might not have been comfortable with Fox's gung-ho attitude during the war against Iraq.
