How Far Can Barry Go? Very Far, It Seems

Barry Diller has become the Ross Perot of Hollywood: rich, unpredictable, and a source of boundless curiosity. Like Perot, some thought that Diller would be sidelined when he traded Fox Broadcasting Co. for QVC Network Inc. But then the legendary programmer served notice that his home shopping channel would be a vehicle for innovations in multimedia. Suddenly, Diller became a guru of the new media age. Now, people from Wall Street to Wilshire Boulevard want to know: Where is Barry going?

On July 12, Diller gave at least one answer. With QVC's long-awaited proposal to merge with archrival Home Shopping Network Inc., he means to dominate electronic retailing. Together, QVC and Home Shopping will virtually corner this market. Without so much as redecorating a TV studio, Diller has put himself at the helm of a $2 billion media company.

But nobody thinks Diller will stop there. Most media watchers take it for granted that the 52-year-old creator of Fox will transform home shopping. QVC wouldn't have a market value approaching that of CBS Inc. if investors expected anything less than revolution. It is Diller's grander ambitions that have people buzzing.

HEAVYWEIGHTS. Will he develop programming that combines entertainment with shopping? Will he make QVC a worldwide network? And the hottest question on the cocktail circuit: Will he use Home Shopping Network as the foundation for a fifth television network? "I see unlimited horizons," says Brian L. Roberts, president of Comcast Corp., who was instrumental in persuading Diller to invest in QVC. "This guy is unbelievable."

Characteristically, Diller is keeping his own counsel: "I have various ideas," he says, "but I'm not ready to share them." Diller does acknowledge, though, that a fifth entertainment network is likely to emerge to compete with the Big Three and Fox. And he wants to be involved.

That's no idle remark, given Diller's backers. In addition to cable operator Comcast, which owns 11.3% of QVC, he has the support of John C. Malone, the powerful CEO of Tele-Communications Inc. and chairman of Liberty Media Corp. Through Liberty, Malone controls Home Shopping Network. Among other things, this helps ensure that QVC's merger will go through.

What's more, Malone and Roberts have ceded Diller amazing latitude in charting QVC's future. Although Liberty's 22.3% stake in QVC dwarfs Diller's 3%, his partners have given him one-third voting control of the merged network. Says Roberts: "This is a genuine partnership. It's not Barry working for Malone."

No kidding: With QVC's stock zooming to a recent 71, Diller's 3% stake is now worth $59.6 million, $34 million more than when he joined. His stock options, which he can exercise in chunks through the next five years, are worth an additional $440 million.

To build a fifth network will require more than money, though. Media watchers offer this scenario: Diller could combine the 40 UHF affiliates of Home Shopping Network with 12 stations that HSN spun off to shareholders last December, but which the merger proposal gives him an option to buy back. HSN would confine its shopping shows to cable, while Diller would produce new shows for the network.

But that puts HSN in a tough spot. Roughly half of its 60 million households come through its broadcast stations. To make up for its loss, HSN would have to greatly expand its cable distribution at a time when channel space is already scarce. And even if digital compression leads to vastly more channels, that could render a fifth broadcast network less desirable.

PARAMOUNT IMPORTANCE. Also unclear is what Diller would put on a new network. He sees scant opportunity in fusing home shopping with traditional entertainment. Whatever way he goes, Diller has some intriguing options. Rumors have Malone discussing a deal with Paramount Communications Inc., which could offer Diller seven stations and a programming arm that has created such gems as Cheers and Star Trek: Deep Space Nine. All three players declined to comment.

Linking up with Paramount would be an ironic move, even by Diller's standards. He ran Paramount Pictures Corp. until 1984, when he clashed with Paramount Chairman Martin S. Davis and left for Fox. But already, Diller has joined with one former boss, Rupert Murdoch, to distribute QVC overseas. A deal with Davis would prove that in Diller's multimedia world, no scenario is too farfetched.

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