Now that Barry Diller has sold his television stations to Univision, the leading Spanish-language network in the US, he is free to make yet another play for Cablevision's cable networks including both American Movie Classics and the Independent Film Channel.
Under the deal announced on Thursday, Diller's USA Networks agreed to offload its string of 13 local TV stations, some serving such prized urban markets as New York, Los Angeles, Chicago, Miami and Philadelphia, plus minority stakes in four others to Univision for $1.1bn.
The Spanish-language network has also assumed USA Broadcasting's liability of $100m, according to USA Networks spokesperson Adrienne Becker. USA Networks originally acquired USA Broadcasting's 13 full power stations for $250m when it bought Silver King Communications in 1995.
The disposal is an acknowledgement on Diller's part that his proposed strategy of turning a ragtag group of stations, most of which had been carrying his Home Shopping Network, into a bona fide network of locally-branded stations offering their cities personalised entertainment, news and sports programming proved simply too grandiose. In the end, only the stations serving Miami, Atlanta, Boston and Dallas managed to make the transition.
"In hindsight, we were probably overly ambitious in attempting to develop these stations locally," conceded Diller.
Analysts believe that USA's real value lies in its cable networks, particularly the top-rated USA Network and the Sci-Fi Channel. That value could escalate further, and increase Diller's bargaining clout with advertisers, if he were now to acquire Cablevision's Rainbow Programming, a division that includes Bravo, AMC and IFC.
USA has made no secret of its desire to buy these cable networks, particularly since they would mesh strategically with his film production and distribution activities at USA Films, but only at a price that makes commercial sense.
Even before this deal, Univision, which is controlled by its chief executive Jerrold Perenchio, already reached some 92% of American Hispanics through its network of 19 stations. Its nearest rival, Telemundo, which is jointly owned by Sony and John Malone's Liberty Media, has a 20% market share. Now both Telemundo and the upcoming Azteca America, partly owned by Mexico's second largest broadcaster TV Azteca, will have to contend with an even stronger rival.
The plan will be to convert all 13 of the newly acquired stations into Spanish-language services, which means that in seven of the top ten Hispanic markets including both New York and Los Angeles Univision will boast two non-English-speaking stations. "As the U.S. Hispanic market continues to expand, we believe there will be tremendous demand for Spanish-language entertainment," said Perenchio in a statement after beating out both Walt Disney's ABC and the Tribune Co in the race to acquire the USA broadcast group.
Univision shares closed three per cent higher at $37.50 on the New York Stock Exchange after the deal was announced; USA Networks shot up almost ten per cent on the NASDAQ Stock Market to finish at $18.50.
Colin Brown in NEW YORK contributed to this report.