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Exhibit 1
USA will file a proxy statement and other relevant documents concerning USA's
contribution of its Entertainment Group to a joint venture with Vivendi
Universal and certain related transactions with the Securities and Exchange
Commission ("SEC"). INVESTORS ARE URGED TO READ THE PROXY STATEMENT AND ANY
OTHER RELEVANT DOCUMENTS FILED OR TO BE FILED IN THE FUTURE WITH THE SEC
BECAUSE THOSE DOCUMENTS CONTAIN OR WILL CONTAIN IMPORTANT INFORMATION
RELATING TO THE PROPOSED TRANSACTIONS. Investors will be able to obtain such
documents free of charge at the SEC's website at www.sec.gov. In addition,
such documents may also be obtained free of charge by contacting USA
Networks, Inc., 152 West 57th Street, New York, New York, 10019, Attention:
Investor Relations.
INVESTORS SHOULD READ THE PROXY STATEMENT CAREFULLY WHEN AVAILABLE BEFORE
MAKING ANY VOTING OR INVESTMENT DECISION CONCERNING THE PROPOSED TRANSACTIONS.
USA and its directors and officers may be deemed to be participants in the
solicitation of proxies from USA shareholders to adopt the agreement
providing for USA's contribution of its Entertainment Group to a joint
venture with Vivendi Universal and the other related transactions described
therein. A detailed list of the names and interests of USA's directors and
executive officers is contained in the definitive proxy statement on
Schedule 14A filed by USA with the SEC on April 9, 2001. Copies of USA
filings may be obtained free of charge at the SEC's website at
www.sec.gov < http://www.sec.gov >.
VIVENDI UNIVERSAL/USA NETWORKS
TRANSCRIPT
DECEMBER 17, 2001
7:30 P.M. EST
COORDINATOR Good morning, and welcome to Vivendi Universal on USA Networks
conference call. All participants will be on a listen only mode until the
question and answer session of the call. Our first speaker for today would be
Mr. Barry Diller. Sir, you may begin.
B. DILLER I think they actually have the order of this wrong. The first speaker
today is Jean Marie Messier, but it is my great pleasure to introduce him.
J. MESSIER Thanks for the kind introduction Barry, and I will give you back the
floor in one minute, just a few comments on Vivendi Universal side of this
transaction of acquiring USA Entertainment assets. I think that the main outline
for us is that through this acquisition, Vivendi Universal US strategy is coming
together. This is a perfect, natural, obvious solution to be stronger and
absolutely competitive on the US market, and it's done in an efficient look at
all sensitive way for the Vivendi Universal. If it is natural, both between the
TV and the movie activities, the productions and distributions, US industry is
going through integrations and consolidations faster than many people thought.
So these transactions are going to give to Vivendi Universal Entertainment, VUE,
size and scale, the right integration from movie to TV prod, the right
integration from programming to distribution.
On the top of this strategic call of the transaction, the financial, yes
a little bit complex and sophisticated, but I think it's end up with a very fair
deal on both sides, a full value for those assets on the USAI and for VU, we can
say that through $330 million USAI shares that we were owning. As for the cash
portion, which is the equivalent of what we received--what Seagram received--and
the time of the initial transaction, most of the transaction is based on the
initial consideration, back to the 97 operations. We can say that these
significantly valued assets are faded out of our directly correlated
significantly valued stock.
On top of that for VU shareholders, we are swapping non-core or
non-consolidated assets against fully controlled, fully integrated, fully
consolidated, full access to cash flow assets. In terms of value, it is very
important, as far as cash flows growth and asset value is concerned.
On the value itself of the deal, I just want to point out that you may
have seen slightly different figures going out. That's very simple. On our side,
we value the deals between $10.3 and $10.8 billion, depending on whether you
consider an average 30 days for every consideration of the deal, which is for us
unaffected. Or if you take the closing price of Friday, on which we can consider
that USA stock was already partially affected by these transactions. The second
difference in the figures that we do take into account, what we consider being
the high value of the warrant that we are receiving on USA interactive assets,
$24 million of them--being not very far from being already in the money, all of
them being very long term, ten years.
So that's the main point I want to underline, in terms of the objective
creation of value to VU shareholders through this transaction.
On the management side, which is critical because talent and management are the
key assets in the entertainment industry, that is obviously more than my
pleasure to have Barry on board for Vivendi Universal Entertainment, and for two
key reasons. The first one is the industry vision that Barry has been
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developing and which is totally substantial with Vivendi Universal vision. The
second point is that Barry has a very strong track record in cash flow growth
and asset value growth to his shareholders. That's my job to have cash flow and
asset values growing for my shareholders by introducing Barry in this very key
operational position, I'm serving VU shareholders.
The additional point on management is the strong commitment of Ron Meyer and
Stacey Snider. They are the team, which turned around Universal Studios group.
They are committed, both of them have taken the commitment to renew and extend
their contract for the five coming years. With that in mind, we will have for
Vivendi Universal Entertainment, the strongest management team as possible, and
I am welcoming that.
Third and final point I want to make on this transaction, which is to give you a
little bit of visibility for 2002 relating to VU, reminding that starting the
first quarter of next year, VU will issue full US gap earnings, quarterly
results. On top of that in 2002, as in 2001, we will continue to care about the
dominant positioning content. We will continue to care about getting operational
control on our key assets. We will continue to care about being really global,
as the split of revenues after this transaction is clearly demonstrated.
2002 with what has been achieved in 2001 in terms of integration and addressing
our only relative weakness, which was integration and consolidation on the US
market, 2002 is going to be a year focusing, first on growth and on internal
growth result of change of perimeter.
Second, it is going to be a year where we will continue to focus on increasing
of distribution reach through commercial agreements, including with MSOs.
Third, it is going to be a year to pursue the full deleveraging of the group.
That's our target for 02 and even for the first half of 02, to have a debt to
EBITDA ratio well below three points, and my rating target and commitment is to
reach a comfortable triple B for Vivendi Universal.
These are basically the main outlines for `02. Where I can finally confirm that
we are comfortable EBITDA wise with what the market consensus on Vivendi
Universal before 9/11, that is to say, before this transaction obviously with 6
billion euros EBITDA for VU media assets.
That being said, I'm turning it back to you, Barry.
B. DILLER When we started to talk about this about a month ago, which seems
about a hundred years ago because of the complexity of all of the things that we
had to go through, what we were really trying to do was to move the timetable up
from what had been originally set forth. As I think all of you know, the
agreements between Vivendi Universal and USA were that after I ceased to be
chief executive, that there was not only a path to control, but it would be
obvious that Vivendi Universal would end up or begin with controlling and more
than likely consolidating the entertainment assets of USA, if not the whole
company.
What I think we've done essentially is we've given early repatriation of
the critical assets. What we have done is actually by having on one side a
standalone USA interactive of real early strength on one side--I'll get into
that in a bit--and on the other, able to put together these entertainment assets
at the most critical time. As I think all of you know and as Jean Marie
referenced, the consolidation and concentration is not something that we knew
about four years ago. It had not really begun to the degree that it has
increased over the subsequent years.
What that has meant is that unless you are able to meet the competition of the
day as strongly organized as you can in every field that you can, there is a
large chance of marginalization. Rather than have the USA Entertainment assets,
which were certainly doing fine and had great growth, but having those
entertainment assets pounding on the door to try and get larger around the very
large media concentration world in which it lived, increasingly said to me that,
that was a very tough road.
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I think on the other side for Vivendi Universal, it's ability to unite its
television interests throughout the world together with USA's interest, together
with its studio operations, together with its international television channels
that came actually out of the original split between USA and then Seagram's. The
ability to combine those into one unified strategic force gives them the ability
to really compete and to really grow and to find the next assets. That
principally is what I will do together with Jean Marie, strategically to have
those assets really grow and become over time, first year, I don't think it's
inappropriate for us that we kind of code named this process Tier One. I think
it was very clear--it was Jean Marie's name at, I think, I don't know, in the
first ten days or so of this, wasn't it?
J. MESSIER Yes.
B. DILLER Something like that.
J. MESSIER Thanksgiving.
B. DILLER Yes, Thanksgiving, in any event, I think, therefore, for Vivendi
Universal, there is that ability for VUE, Vivendi Universal Entertainment, which
will combine the USA Entertainment assets, the recreation parks, and the studio
operations. I believe that just that piece of it is also perfectly organized. It
has very strong executives. There's been a lot of comment and such about my so
to speak disrupting possibly the very good work of the studio group. Which I
have utterly no intention as I have said to the executives of the picture group,
principally, Ron Meyer and Stacey Snider, who I've had some fairly extensive
conversations with.
I am a supporter of theirs. I will more cove to what they are doing than to ask
them to cove to my historical way of operating. It's not that I'm not
opinionated, etc., but somebody I saw said that I will try and fix which, so to
speak, isn't broken. Historically, that has not been anything like what I have
done, nor will I do it here.
What I will do is try to integrate first of all, the television operations under
Michael Jackson, who joined us recently as I think some of you know, from
running what I think is the best channel in the world, Channel Four in Britain,
and is the senior executive on the television side and who will coordinate all
of the Universal television operations. He in turn will report to Ron Meyer. Ron
Meyer will in turn report to me. So I think that the symmetry of that is fine.
For USA Interactive, many of you have certainly listened to me about my belief
in interactivity. We start with about 9% of all interactive commerce revenue,
and our goal is to double that within the next year. We start this enterprise
with absolute strength and cleanliness. We have obviously, a very strong current
cash flow. We believe that the cash flow in the first year will be a little over
$600 million, meaning in 2002 for the operating businesses. We will start with
close to $3 billion in cash.
We have been in this area enormously acquisitive. We have made more than 40
acquisitions on the interactive side alone and we have as I think you all know,
done it very strategically. There is enormous amount of opportunity at right
this moment at right that sector for us to grow, both by internally growing the
businesses we have and certainly by acquiring new ones. So we are at a perfect
time and at a perfect place.
I actually think that the idea of doing this, the idea that on the left side so
to speak of the brain, we have a USA interactive company that has no drag on it,
no conflict, no confusion, no constantly trying to relate the two sides before
their time, though there is a relationship between interactivity and
entertainment. The commercial agreements that we are going to do between Vivendi
Universal and USA will underscore the relationship between entertainment and
direct selling in all of its various forms and interactivity.
But with the USA Interactive Company formed the way it does, it is I think,
actually a perfect combination of businesses of real clarity. On the other side,
I think Vivendi Universal is able to together with the
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announcement--I think it was the other day on Friday of the Echostar
transaction. No one can I believe discount the strategy for Vivendi Universal.
I'm going to do one more thing before we turn it over to Q&A, and I'm sure it
will be, if not the first question, it will be an early question. What of my
time, my time commitments, etc.? Let me talk historically.
First of all over the last five, six years, I have spent about 50% of my time on
interactivity and 50% of my time on the entertainment side. In the world by the
way, as I think you all know when you start dividing up time, it does not work
in some percentage process. That's just not realistic. It's not life. What will
happen in this case is, some days I will spend a majority of my time on USA
Interactive; some days I will spend a majority of my time on the Vivendi
Universal. What I am confident of, and Jean Marie and I have talked a bit about
this, so we're comfortable with this. I can only say that to the shareholders of
USA as well as to the shareholders of Vivendi Universal, I understand what the
time commitments are. I'm completely confident that I'm going to be able to
acquit both areas of responsibility and by the way, have time left over.
So I understand why people certainly look at this and say, "How is he going to
`divide' his time?" I absolutely believe and I would not have done this
otherwise, that my ability to do so and to do it in a way that it is not going
to scare any of the horses involved in either of the enterprises, is a
completely confident one. I'll answer the question by the way in any other way
anyone wishes, but I thought I would just lead with it, since I know it's
certainly a topic of questioning, understandably by many people.
At this point, unless there's anything else Jean Marie would like to do, I think
we turn it over to questions. We have about four minutes for questions, so
please do whatever you would like to do. That's a joke, don't worry.
COORDINATOR Our first question comes from Sharon Williams.
S. WILLIAMS This travel channel, I know this is not content center here, but
would your plans still be to in the future, launch a cable network around the
travel business, which I thought was an exciting long-term growth potential?
Would this end up now sitting at VUE instead of at USA Networks, since I think
of it as contributing value over the long term?
B. DILLER Actually, I think it's a good question. Yes, we will without
question develop a travel channel. We actually already have a travel channel
service channel in Germany, but we will establish a US travel channel. The
agreement between USA and Vivendi very carefully and clearly divides the
businesses of interactivity and commerce and transaction on the USA side and the
entertainment on the Vivendi Universal side. What we will also do we hope is
look for various ways to partner with Vivendi Universal in a lot of these
enterprises. So while in this case the Travel Channel, which will relate to our
travel assets-- I can't call it the Travel Channel. I can call it USA Travel
Network or else I'm going to get in trouble with my friend John Hendrix who runs
the Discovery Travel Channel. But the Travel Network, whatever we're going to
end up calling it, Travel, is going to relate to our Expedia assets, our hotel
reservations, our Travelscape, etc. So it's on that side, in terms of the
counting mechanism.
COORDINATOR Our next question comes from Mario Gabelli.
M. GABELLI Congratulations. This is interesting. By the way, I also want to
commend you guys for putting a statement in there about Edgar Bronfman. I think
he was just poorly maligned by everyone, but I don't want to spend any time on
that. It was a terrific deal when they did the deal with you, Barry, and this is
a terrific deal. I am looking forward to when you merge with the next target
when Jean Marie gets his distribution in the United States. But Barry, there's
an old school on Wall Street that says, "Let's follow the
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money." How many options do you have in USAI? Where do they go? How does this
deal work in terms of your put option on the 1.5%?
B. DILLER I own about four million shares outright, I have options on about
46 million shares of USA, and I will continue to hold them. I'm not selling a
single share.
M. CABELLI Okay, so you're going to have your money primarily in USAI, the
ongoing new co.
B. DILLER Well, I have money in both places, Mario--
M. CABELLI Well, I'm delighted.
B. DILLER As you do you as well, but in any event as I said, I'm not selling
any shares in USA. On the Vivendi Universal Entertainment side, I have an
interest. It's a small interest, but it's certainly not insignificant in dollar
terms, and I will hope and plan for that interest to grow. USA also has an
interest on the Vivendi Universal Entertainment piece. I'm going to call it from
now on VUE, and you'll over time I think understand that. But USAi interest in
VUE is a little over 5%, and that has real value, and that we intend to grow.
So I think actually when you think about this, it's quite nicely
balanced. Yes, the majority of my equity is at USAI. I fully intend to have that
equity grow. I don't want to make as you know, extreme statements--but I think
that would we not be able to grow it, it would be a crime unto man. I can't
conceive that USA will not have great growth in the next few years.
M. CABELLI Thank you, and to Jean Marie, I look forward to your next step in
the distribution strategy.
COORDINATOR Our next question comes from Marian Buscher.
M. BUSCHER I was wondering if you could comment about the USA debt outstanding
and what the plans are for the bondholders?
B. DILLER Let me introduce Victor Kaufman. Victor Kaufman is, of course, as I
think all of you know, the Vice Chairman of USA. He will certainly continue in
that capacity. Go ahead, Victor.
V. KAUFMAN The public debt will remain outstanding. It obviously becomes even
more secure than it is today since we will as Barry said before, have around $3
billion in cash, plus an additional probably over a billion dollars in debt
capacity. We are going to operate USA Interactive in exactly the way we've
operated the company in the past, which means that we will not allow our debt to
EBITDA ratio to go above 2 to 1. So we see ourselves as having about $4 billion
of capacity to grow the business.
M. BUSCHER Have you spoken to the rating agencies at all at this point?
V. KAUFMAN We have spoken to the rating agencies, and I think they're
extremely appreciative of our bringing them up to date, and we'll have more
discussions with them today and in the coming days.
M. BUSCHER And any indication from them what direction they're headed in?
V. KAUFMAN I think you really would have to wait until they put out whatever
they do, but obviously in addition to on a net basis, we really have no debt
other than the public debt outstanding. We have such a strong balance sheet and
such a strong basis of earnings, which we intend to grow, that we're confident
that we will be able to keep our credit ratings and to grow the business.
COORDINATOR Our next question comes from Mike Nathanson.
M. NATHANSON I had a couple questions. Firstly now that VUE is going to be a
much larger entity, will you be reporting it out separately from the CANAL+
assets? That would be the first question.
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The second question is more operational. Now that you're changing
ownership, putting the networks closer to the studio, how does that change,
Barry, as the programming at USA channel, what could you do now that you weren't
doing in the past? Talk a little bit about how you bought Universal films before
and how that process will be now.
And lastly, for Jean Marie, now that you just got bigger in the film
business slightly with USA's films, will you be able to downsize that
investment?
B. DILLER As far as programming is concerned, the relationship between film
studios and television operations, you can see all over the place. You can see
for instance, the vertical integration that has taken place particularly at Time
Warner. It used to be that Warner films were sold to CBS, etc., and to other
non-aligned networks. Now these films have their sequential distribution chain
in Time Warner owned assets--channels: TBS, TNT, etc. You see the same at Fox.
It's part of the reason that Disney paid the amount that it paid for the Family
channel.
M. NATHANSON Yes, I wonder if before you were in USA separately, were you
getting a crack at the Universal assets? I hear what you were talking about. But
were you getting the same opportunity?
B. DILLER We got a crack at them, but there is an entirely different thing
when you unify a library, which Universal has an extraordinary library on one
side, together with the current, so to speak, preen the titles--meaning the
titles that you want to run through USA networks, through USA Networks, a very
large percentage of its programming is the running of theatrical motion
pictures.
The other thing is the kinds of shows that you can develop out of, not only the
library on the film side--FAST AND FURIOUS is a very good example. It's one that
we're currently talking about. There are all sorts of other examples, as you go
through the extraordinary success of Universal over the last several years. On
the library side from BATTLESTAR GALACTICA, which is an old television series of
Universal's that we're desperate to develop as a television series.
Literally, it is the two sides of a circle. That when they operate together,
when you get the throw weight of the films side and sensibility together with
the television side and you begin to integrate those things--you begin to use
those things to create new services--is where I think the beginning program
synergies will exist.
J. MESSIER Was your last question relating to the downsizing of USAI Films?
M. NATHANSON Right.
B. DILLER I didn't hear that. USA Films is not "downsizing." USA Films is a
special movie producer and distributor, which has had very good success,
currently with THE MAN WHO WASN'T THERE and GOSSAMER PARK, which opens any time
now, which is a really good film, which in the investment of USA in USA Films is
small. It's a special film operation. It's going to continue. The plans that we
have talked about, and I think it's important to kind of understand the nuance
of this because it shows--as against what people speculate--it shows I think,
the thoughtfulness of this process.
USA Films is going to continue. Universal has a division called Spotlight, and
Spotlight is going to--we think, our plan is--to merge into USA Films.
Interestingly, though, USA Films, which is under the direction of Michael
Jackson, will continue. However in that respect, USA Films will report to Stacey
Snider, because you must have a totally integrated motion picture operation
worldwide. So in the television side, he will report to Ron Meyer, but on the
movie side, he's going to report through Stacey Snider, because it's the right
way to organize, so that there is no dissension from anybody for anything from
the first hour of the first day.
What we expect, by the way, is to have a growing and thriving special film
business. It's a great category, and it's one that we've already got some
success going on. So that is our plan for that.
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M. NATHANSON Okay, and the last question was the first one about breaking out
VUE from CANAL+
J. MESSIER Yes, I'll take this one after underlining what Barry has just
explained gives you the key for most of the synergies that we can take out of
this integration. So there is a lot to be done in terms of optimization,
rationalization of the operations of the VUE. We intend to do that quickly in
the most fashionable and efficient way with everybody's activities reporting to
Stacey. It will allow us to fully continue all politic of optimizing every movie
production, not only by the way on a US basis only, but including the worldwide
approach with Studio CANAL. I think that Barry did underline some very first
examples of common initiatives that we can take.
On your first question, Mike, that's no problem. Obviously, thanks to the
size of VUE and the CANAL+, we will report separately both of them.
COORDINATOR Our next question comes from Kate Oakley.
K. OAKLEY I have a question for Jean Marie Messier. How do you plan to take
advantage of this distribution platform? I remember hearing early this year you
were saying, "That's a big gap in our business plan. We've got to have
distribution in the US to be able to deal with Yahoo." Now you've got Echostar
and now you've got this, but how are you actually going to leverage that? Are we
going to start seeing you launch new channels? The stake you have in Echostar
isn't that big, so what can you do to influence things there?
I also wanted to ask a second question that maybe both of you can answer.
It's about the growth in interactive services. Now, Barry, you've talked about
how on-line is really where you've been focusing, but in Europe, there's a lot
of interactive television. We've got Mobile. Messier already had deal with a
Vodafone with Vizzavi. How do you see all of that--maybe moving into that realm,
because you have all this experience with ticketing and things like that?
J. MESSIER On your distribution question, Kate, my first point to remind you
that in order to distribute, you need to have the right products, and that the
strength is first in your content and products capacity. By putting together USG
and USAI entertainment assets, we are reaching the right size, the right simple
organization to maximize the usage that we can do and the content that we can
build around our TV and movie assets, and it remains the first leverage
vis-a-vis distributors.
The second one is that when you are referring to EchoStar, two comments
there. The first one, we do not need to buy distribution. There are objective
reasons, which just defy the strategy partnership with Echostar and hopefully,
with Echostar/Direct TV. The first one is that Echostar is a satellite player,
and it is going to be, we hope, the largest and the most efficient US satellite
and digital TV platform. We have the largest and the most efficient one in
Europe, with CANAL+. It paves the way to worldwide satellite distribution and
digital TV agreements.
That's the reason why EchoStar on top of commercial distribution agreements is a
natural equity and strategic partner. On top of the fact that, on the pure
financial basis, this is the low-risk downsized protection investment and a good
swap vis-a-vis our BSkyB stakes because that's cheaper and more strategic.
That's the reason why we made this strategic partnership with Echostar.
How are we going to use it? Two ways--the first one, the existing
agreement, to launch and to welcome on EchoStar platform, five new channels to
152 initial channels, which are going to leverage our content capacity, action
and suspense and movie on one side, music and the young generation on the other
side, games on a third side, plus the availability for three years of the
equivalent of one transponder now said the ability to launch on top of that up
to eight or ten new interactive services with the right access to bandwidth in
order to launch those services. So by definition through this strategic
partnership, Echostar is going to be the right platform and the right privilege
access to launch these new channels as these new interactive services.
These distribution agreements with Echostar are obviously not excluded. We will
go for commercial agreements with MSOs. One of the key points on Echostar is
that it does have national coverage and that all channels based on the content
strengths, based on if management strengths of the VUE are successful,
obviously, it will help us to break commercial deals. We have a significant
number of MSOs.
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One of our goals is at least after three years of time, to have at least as many
subscribers outside Echostar platform than subscribers coming from Echostar.
This is--
K. OAKLEY In the US.
J. MESSIER In the US, yes. This is the strategy that we are going to
implement. Basically what you can see is that USAi is, not only an abvious
operational fee but that USAi plus the strategic partnership with Echostar and
Direct TV is giving an additional access to distribution and that the two
transactions are adding value to each other and that the two transactions
combined are clearly addressing what was viewed as the relative weakness of
Vivendi Universal on the US market. That's the clear beauty and the clear value
of doing those two transactions at the same time.
K. OAKLEY Barry, you were going to talk about how you were going to make
interactive not just on-line, but actually leveraging some of Vivendi
Universal's other things including interactive television, and also, we've got a
big mobile deal that we're trying to see if there's any business in, really.
B. DILLER I think that there's this natural relationship between on-line and
off-line, as evidenced currently by HSN in the United States, together with
HSN.com, which is kind of seamless. I don't think of it as really broadband,
because broadband is, after all, rich video with a transactional pipe in real
time along side. This simulates it so to speak before there is a large broadband
penetration.
In Europe and throughout the rest of the world where Vivendi Universal is
particularly strong, I think that what we're going to do through these
commercial agreements is to begin to make those ties in different ways and start
those assets being seamlessly related to each other on all of the interactive
television forms that are developing--some quicker, some slower than they are in
the United States. So, again, actually, the truth is I can't say it any better
than Jean Marie just said it in terms of--
K. OAKLEY And HSN, do you think HSN will come to Europe?
B. DILLER HSN is in Europe. HSN currently operates--
K. OAKLEY But much bigger than it is?
B. DILLER It currently operates in Germany in a large and profitable
business. It just started in Italy this year. It started in Benelux. It already
has an arrangement with Canal in France. It opened in the UK last year. We are
all over Europe. We are in China. We are in Japan.
J. MESSIER And if I may add two points, Kate, if you were able to combine the
right way through cross-promotion and cross-marketing, our respective internet
activities, do you know that thanks to on VU, the leadership that we have for
music on-line reach and games on-line reach, to combine Unique Visitors reach of
VU.Net and USA Interactive would rank number four on a world-wide basis right
after the three traditional ISP's, AOL, MSN and Yahoo.
The second point I wanted to add is that you referred to Vizzavi. Just to
give you an update on Vizzavi, over the last three months, the number of
registered customers of Vizzavi have continued to increase sharply: 41% of
growth of registered customers over the last three months. In terms of number of
Web or WAP pages viewed on a daily basis as the number of WAP minutes generated,
Vizzavi has increased by 40% to 50% over the last three months. As you know, we
have reached with Vodafone a full agreement on the business model, focusing only
a small part of the revenues on the distribution fee on that plan, and Vizzavi
caching most of the services and SMS value revenues, 80% for Vizzavi; 20% for
the mobile operators.
Vizzavi has been late as a launch because the GPRS technology being late. Now
that Vizzavi has been truly launched in Europe, in eight countries in Europe,
the take-off is answering in terms of growth to what were our expectations.
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K. OAKLEY What's the total number now, Mr. Messier, of the subscribers?
J. MESSIER We are over seven million registered subscribers, registered
customers, and we expect to be over ten million in the course of Q2 of next
year.
COORDINATOR Our next question comes from David Goldsmith.
D. GOLDSMITH I just want to attack this a little bit differently.
Congratulations guys. Liberty Media, first will just take care of a housekeeping
thing, how many shares of the new USA Interactive will Liberty Media hold, and
what kind of other relationships do you at USA expect with Liberty Media and
Vivendi as well?
B. DILLER Liberty will hold about 18% of USA with about 90 million shares,
and John Malone and the President, Bob Bennett--but John Malone and I have been
partners since I left Fox almost 10 years ago. I'm glad that Dr. Malone and
Liberty are going to continue. We are discussing as we always do with Liberty, a
whole series of transactions--things that we're going to do principally outside
of the United States, although there are a couple of things that we could do
inside the United States with Liberty, and we expect them to fully participate.
John Malone and Bob Bennett are going to be on the USA board as will Jean-Marie
Messier and Phillippe Germond who I believe, I don't know his exact title, but
he is head of the interactive assets fof Vivendi Universal. But as it relates to
Liberty, they will be full participants and I would think that, that would
continue in force for hopefully the rest of my business life.
J. MESSIER Perhaps on the VU side, Liberty Media will own 37 million
VU shares, including five million shares swapped against its interest in
Multithematique or programming entities. With 37 million shares, the agreement
in terms of liquidity that we have with Liberty Media is that, they are
suggested to stay at the 5% level for four years. That their liquidity is going
to be 40% at the closing of the transaction, 30% lock-up of 12 months and 30%
lock-up of 18 months. We very much welcome Liberty Media as a very significant
shareholder of Vivendi Universal, and are pleased with the commitment of Liberty
Media to be a long-term shareholder of Vivendi Universal.
We are looking at the same time to perform off our relationship in Europe. We
are the leading satellite distributor in Europe. They are the leading through
UPC and the recent German cable operation, they could become the leading cable
distributor operator. We do not intend to have here on the distribution side
capitalistic agreements between the two of us, but we have a strong area of
common interest in Europe, which is programming, where we would welcome on both
sides, switching together without any equity intrusion of any kind, neither on
one side nor on the other side. We would very much welcome putting together all
of our programming European forces achieving then leading Pan European
programming entity able to deal with every single distribution platform in
Europe.
So for us, the Liberty Media agreement is not only welcoming a shareholder. That
is also the occasion to make and prepare a common attractive step in the
programming area on the Pan European basis.
COORDINATOR Our next question comes from Richard Simon.
R. GREENFIELD It's Rich Greenfield. I have two questions. First, can you, Jean
Marie, just comment on how when this transaction is combined with the Echostar
deal on Friday, how this changes your approach to US distribution going forward?
And two, could you comment on how when you combine the Echostar
transaction with the USA transaction this morning, what types of opportunities
it creates from a new channel standpoint?
J. MESSIER Basically the right order of presentation would have been the
reverse. Before distributing, you need to be able to build the products. The
combination and the creation of Vivendi Universal Entertainment allows us to
leverage our fantastic library and the management teams of both sides to be much
more proactive on TV production and the ability to create and to develop new
channels. The expertise, the skills and the assets of USA Entertainment were
needed to achieve that.
The second point is that you have to look at Echostar as the privileged
platform, a privileged partner, but obviously not the exclusive distribution
partner of VUE. The strategic partnership with
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Echostar allows us in very good economical conditions with subscriber fees from
day one of the launch, to have directly a national reach for those new channels
through a close relationship with the teams, to have a better time to market of
the new launches, not only on the channels side. But also of the interactive
services side, we definitely think that music and games are going to be
absolutely key in those entertainment interactive services to the consumer. So
we have a national platform on a privilege basis and with the best time to
market that you can imagine. From that film basis, we intend to develop further
distributions with MSOs and on the basis of commercial agreements with MSOs.
COORDINATOR Our next question comes from John Dean.
J. DEAN My question has already been answered. Thanks.
B. DILLER I guess that was the last question. No, we'll do one more, and
then as I think most of you know, we're going to follow this with a USA
Interactive analyst and investor call, which I guess we'll probably take a
couple of minutes breather, and then we'll go right on with that to answer any
specific questions about USA Interactive.
J. MESSIER And as you know, there has been also a conference call, just
before this one with European investors and then a list that you can access to
which has been recorded and which is at your disposal also.
B. DILLER Yes, you can listen to us probably all day and from now on. Next
question. It doesn't exist? I would then say, thank you very much, and we'll
look forward to talking to you both on and off-line.
J. MESSIER Thank you all.
COORDINATOR Thank you for participating in this conference call. You may
disconnect at this time.