Joins USAs E-Commerce Stable

Padding its electronic-commerce portfolio, USA Networks
Inc. agreed to merge its Internet Shopping Network assets with e-commerce enabler Inc. last week.

USA will combine ISN's assets -- which include and -- with, forming Styleclick Inc.

USA agreed to give a $10 million bridge loan
and to invest $40 million in cash in the venture. Styleclick also gets $10 million in
advertising on USA cable networks, television stations and Web sites. USA ends up with 75
percent equity in the venture.

ISN's and's assets are worth a combined $550
million, executives said. sells clothes, apparel and other merchandise
on its Web site, using a proprietary technology that lets Web surfers view items from
multiple angles and in 3-D. Much of the company's business is focused on handling
e-commerce transactions for other outfits, including America Online Inc., Excite@Home
Corp. and Oxygen Media.

"We believe that as a new company, we'll have the
ability, technology and access to capital and logistics to not only drive revenues
but, more important, to reinvent the way e-commerce is presented to consumers," co-CEO Maurizio Vecchione told analysts during a conference call last week.

The deal gives USA assets to boost its e-commerce platform
and allows the company to do business with third-party companies looking to drive online
sales, USA Networks Interactive president Dara Khosrowshahi said.

"It puts us in a position of having a number of
[e-commerce] verticals that sell primarily to the female demographic, which, as we all
know, is becoming a much, much more important demographic," she told analysts. handles e-commerce for more than 200
vendors, offering more than 6,000 products in 93 different e-commerce categories such as
clothing and jewelry.

The company's business is based on a revenue-share model,
where usually keeps about 5 percent of the gross transaction, Vecchione
said. also handles fulfillment for many companies, he added.

Vecchione will be CEO of the new company, Styleclick. ISN
chief operating officer Bill Lane will be president and vice chairman, ISN chief financial
officer Ed Zinser will be COO and CFO Barry Hall will maintain that title.

USA doesn't plan to fold its Home Shopping Network venture
or into the new company, USA Networks vice chairman Victor Kaufman told analysts.
"We like maintaining the entrepreneurial spirit within the context of separate public
companies," he said.

The deal was announced last Tuesday. That day,'s share price closed at $14.25, down $3.25 (19 percent) from $17.50 at
Monday's close. The next day, it ticked down to $13.94.

USA's share price rose to $53.94 from $50.50 last Tuesday
on the news, up 7 percent, but it fell back to $51.50 the next day.