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USA Splits Into Three Units

For the second time in three months, USA Networks Inc. (USAi) completely revamped its corporate structure.

This time, the company has been split into three units: USA Entertainment, USA Electronic Retailing and USA Information and Services.

"While we fully expect continued strength in our operations going forward, course-correcting adaptations are vital to the execution of a focused agenda," USAi CEO Barry Diller said in a prepared statement announcing the latest restructuring.

The announcement Friday morning followed the resignation of USAi president and chief operating officer Barry Baker last Wednesday after 16 months on the job.

Word of Baker's planned departure and the corporate restructuring comes at a crucial point for USAi, with its 45 percent owner, The Seagram Co. Ltd., formally announcing an agreement last week to merge with French media giant Vivendi S.A.

The announcements also came the week after internal bickering between Baker, Diller, USA Entertainment president Stephen Chao and former USA Networks co-president Stephen Brenner was revealed at a trial between USA, Viacom Inc. and World Wrestling Federation Entertainment Inc.

Baker said no specific event prompted his departure, emphasizing that he wanted to leave USA to run his own business once again. Baker-who first worked with Diller in the 1980s, when they were both at Fox Broadcasting Co.-was CEO of Sinclair Broadcast Group before joining USAi in February 1999.

The USA Cable unit that was unveiled in March, encompassing USA Network and Sci Fi Channel, is no more. Those channels, as well as recently acquired cable networks Trio and Newsworld International, Studios USA, USA Films, USA Broadcasting and SCIFI.COM, are now under USA Entertainment, which Stephen Chao will run as president.

USAi's USA Information and Services division contains Ticketmaster, CitySearch, dating service Inc., Hotel Reservations Network, customer-care company Precision Response Corp., database marketing company USA eSolutions and Internet company Inc.

USAi might spin off the USAIS division down the road in an initial public offering. It might also buy stock in the Ticketmaster Online-CitySearch Inc. company from the open market "as part of USAi's strategy to retain significant equity stakes or increase its ownership in its public subsidiaries," the company said.

USAIS generated $900 million in pro forma revenue in 1999, the company said.

The Electronic Retailing unit contains Home Shopping Network, HSN International and HSN Interactive.

Baker said he will remain at USAi "certainly through the fall, unless something outrageous happens."

The latest restructuring of USAi's management team comes just three months after the company revamped its USA Networks unit. The division that had formerly been run by co-presidents Chao and Brenner was renamed USA Cable.

USAi announced in March that Chao had been named president of USA Cable, and that Brenner would assume the new position of senior vice president at USAi, where he supposedly would work with Baker "in overseeing the corporation's distribution agenda and other corporate projects."

But Brenner recently testified during USA's court battle with WWFE and Viacom that "effectively, I was removed from the company," and that he had no day-to-day responsibilities at USAi since early March despite the announcement that he had been named USAi senior vice president.

"Chao was their person," Brenner said in a brief interview outside of a Delaware courtroom after he completed his testimony June 13. "Diller was gracious," he said, adding, "I'm very proud of what I accomplished there."

Brenner testified that USA's attempt to renew its contract with WWFE sparked much infighting at USA between he, Baker, Chao and Diller. He also testified that he had "not the best of relationships" with Baker.

"I don't think that's true. If he says it, that's fine," Baker responded last week.

Brenner has since taken the job of CEO at pay-per-view network In Demand LLC. A 17-year USA veteran, Brenner was the last senior USA executive to survive the shakeup that followed Diller's takeover of the company in 1998.

Executives who have left USA since Diller took over include founder Kay Koplovitz, president of entertainment Rod Perth, senior vice president of marketing Andrew Besch, vice president of affiliate marketing Diane Weingart, senior vice president of corporate communications Iris Burnett, vice president of original programming Monia Joblin, vice president of series development Medora Heilbron and vice president of long-form programming Ian Valentine.

At Sci Fi, vice president of programming Barry Schulman and vice president of marketing Harry Mosher were also replaced.

During his short stay at USA, Baker said he is most proud of "getting the divisions to work with each other and getting a great electronic-commerce strategy going that we can show to the public."

USAi's Electronic Commerce and Services unit has been a bright spot, cutting deals in recent months with the National Football League, the National Basketball Association and the PGA Tour.

"During this past year, [Brenner] has done great work in both staffing and stitching together the disparate parts of the company and bringing a rationalized strategy to our agenda. But as good as he is as a chief operating officer, his history and his talents lie in being a chief executive," Diller said in a prepared statement.

Credit Lyonnais Securities analyst Richard Read said he didn't think Baker's departure "makes that much of a difference" at USAi.

"Here's a guy who wants to own his own company," Read said. "Baker was only around for a year, and he made a meaningful contribution. I don't think this means there are no deals in the pipeline. I don't think they operate any less efficiently now that he's not there."

Mike Farrell contributed to this report.