<Page>
EXHIBIT 2
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 >.
USA NETWORKS, INC.
MODERATOR: BARRY DILLER
DECEMBER 17, 2001/8:15 A.M. CST
PAGE 1
USA NETWORKS, INC.
DECEMBER 17, 2001
8:15 A.M. CST
Coordinator Good morning, and thank you all for holding. I would like to
remind all parties that your lines have been placed in a
listen-only mode until we open for questions and answers.
Today's conference call is also being recorded. If you have
objections, you may disconnect at this time. I would now like
to turn the call over to Mr. Barry Diller. Thank you, sir. You
may begin.
B. Diller Thank you. Good morning, everyone. I don't know how many
of you were on the last call. I doubt any of you were on
our first call this morning, which was at 6:00 a.m. New
York time, which was done for European analysts,
particularly, obviously, for Vivendi Universal. On this
call today with me are Victor Kaufman, our Vice-Chairman;
Roger Clark, who is Vice President of Investor Relations;
and John Miller, who is the CEO of Information Services.
<Page>
USA NETWORKS, INC.
MODERATOR: BARRY DILLER
DECEMBER 17, 2001/8:15 A.M. CST
PAGE 2
In any event, I think you all have a general understanding of
this. The only thing that I would say at the outset is, and I
don't really want to repeat myself very much from before, but
the central issue is that, in this transaction, and I'll in
this case speak for USAI shareholders, we have been able to
achieve through this a standalone and independent company with
interactivities that already is a large player in Internet
commerce worldwide with about 9%, which we hope over the next
year that we'll be able to double. We certainly have the
resources; we have the wind at our back to be able to do so.
We start off with a projection for next year of over $600
million in cash flow, we have an extremely strong balance
sheet, and we are in an area that is just a perfect time to be
in the, so to speak, pure position that we will find ourselves
in.
I want to address one other thing, and then I'd really like to
turn it over to questions, because I think that's the way we
will get the most out of this session. There have been, and it
is entirely reasonable that there be, questions about how I
will spend my time. I am, of course, going to remain as the
Chief Executive of USA Interactive. I will also be the Chief
<Page>
USA NETWORKS, INC.
MODERATOR: BARRY DILLER
DECEMBER 17, 2001/8:15 A.M. CST
PAGE 3
Executive of Vivendi Universal Entertainment, which will
comprise the studios group, the recreation group, and the USA
Entertainment asset. As to how I will divide that time, there
is no precision at this. Life does not work that way. I,
previous to this day, have divided my time somewhat equally
between the two. With that said, I would expect that, again,
one side of that would be on one day I would spend a majority
of my time on the Interactive side, and the other day I would
spend a majority on the Entertainment side. Life works that
way.
The one thing that I think is absolutely true, and I have
thought about this a great deal in the last month, is that I
understand what the responsibilities are. I have history in
this area, in both of these areas. I have a very long, as you
all know, history in the entertainment business, and I think I
have a pretty long history in the, so to speak, Interactive
business, which began for me almost exactly ten years ago. So,
I know what needs to be done. I am perfectly confident that I
can do both without diminishing either, and without in any way
having either say to me, "We thought you would be here this
morning," or things of that nature. I am really quite
confident about that. I wouldn't have done this otherwise.
<Page>
USA NETWORKS, INC.
MODERATOR: BARRY DILLER
DECEMBER 17, 2001/8:15 A.M. CST
PAGE 4
Of course, all of my actual equity, in terms of not having
sold a share of USA stock, is on the USA side. I have an
interest in the Vivendi Universal Entertainment venture, and
it's not an insignificant interest, but USA also has a not
insignificant interest--5.4% interest in VUE, as we will start
to call it. I think that balances are fine here. While I
understand concern, and I understand issues, I really do think
that I am the one who can tell you all that it is not to
worry, and I don't say it cavalierly.
With that, I think that Victor Kaufman is going to do a very
brief summary of the deal, and then we will turn it to Q&A.
V. Kaufman The transaction that we've entered into, with all of its kind
of inherent complexity, is really quite simple. USA and
Vivendi are forming a joint venture, which will own both
companies' domestic entertainment assets. USA Interactive, our
new company, will retire in effect 377 million shares, or
approximately 47% of USAI's outstanding shares on a fully
diluted treasury method basis.
We'll receive $1.6 billion in cash, as well as $750 million in
a full value preferred. We will also own, as Barry just said,
5.4% of the JV, which we value at approximately $1 billion.
<Page>
USA NETWORKS, INC.
MODERATOR: BARRY DILLER
DECEMBER 17, 2001/8:15 A.M. CST
PAGE 5
VU, for all intents and purposes, will no longer be a USAI
shareholder, except that VU will receive warrants to purchase
60 million shares of USA common stock, plus it will retain the
upside on an additional 56 million shares at prices above $41
per share.
To put this in context, if USA sells at $40 a share, there
will be approximately 3% dilution relating to VU's upside
interest. At $75 a share, the dilution is approximately 12%.
This dilution, in our mind, is relatively modest, since USAI's
outstanding stock base is relatively small.
In addition, USA will receive enough cash dividends relating
to the preferred stocks that we're receiving to more than
cover all of the deferred taxes on the transaction, which
become due 15 or 20 years out with respect to the cash and
securities. That's an extremely important point because in the
way in which you can look at the transaction, you can view all
of this cash and the preferred stock, the $750 million
preferred, as real cash.
If you assume that we have reacquired our own stock at $22 a
share, which is a relatively cheap price, and that's the price
we were kind of talking
<Page>
USA NETWORKS, INC.
MODERATOR: BARRY DILLER
DECEMBER 17, 2001/8:15 A.M. CST
PAGE 6
about with Vivendi, the consideration received by us in the
transaction is $11.7 billion.
So, what does the new USA Interactive look like after the
transaction? We anticipate revenues in 2002 of over $4 billion
growing to over $5 billion in 2003. EBIT DA for our operating
businesses is budgeted at over $600 million for 2002, and over
$800 million in 2003. We'll have outstanding approximately 427
million shares on a fully diluted treasury method basis, and
this low share base should prove as a real lightening rod for
growth as we build our businesses at well in excess of a 20%
growth rate for the foreseeable future.
We also have a lot of capacity to use for growth. We'll have
about $2.3 billion in cash, another $750 million in preferred,
which we expect to monetize and turn into cash, plus debt
capacity of over $1.2 billion. Based on our usual conservative
ways of looking at leverage, we will not lever the company at
more than two times EBIT DA, which we have been historically
been true to.
All in all, we'll have over $4 billion to use for internal
growth and for acquisitions, but don't think we're going to
use this cash for large acquisitions of "overvalued" assets.
As you know, we don't overpay. We
<Page>
USA NETWORKS, INC.
MODERATOR: BARRY DILLER
DECEMBER 17, 2001/8:15 A.M. CST
PAGE 7
think there are a significant number of potential acquisitions
out in the marketplace, which we will pursue to fit perfectly
into our integrated interactivity strategy. Hopefully, we can
buy those assets at very reasonable EBIT DA multiples, which
will be worth significantly more as part of our asset base.
Of course, we believe that we are significantly undervalued at
our present stock price. If we just take the considerations we
are receiving, which equal $3.3 billion dollars in cash and
cash equivalents, the market value of the shares of
Ticketmaster, Expedia, and HRN, that would leave our remaining
assets, HSN, PRC and ECS at being only worth $2.5 billion
dollars, which is virtually impossible in our mind since that
valuation would represent a 6.9 multiple of EBIT DA.
Hopefully, we are looking at a period with extremely good
prospects for stock appreciation and for real growth within
our enterprise. So, with those thoughts, now let's turn to
questions.
Coordinator Thank you. Victor Miller, you may ask your question. Please
state your company name.
<Page>
USA NETWORKS, INC.
MODERATOR: BARRY DILLER
DECEMBER 17, 2001/8:15 A.M. CST
PAGE 8
V. Miller Victor Miller from Bear Stearns, good morning. A couple of
questions. First of all, could you give us a sense of the
size, if possible, of the pro forma revenues and pro forma
EBIT DA of the residual VUE Company, as you call it?
Secondly, I imagine one of the challenges in the past of
ever considering rolling up what's left of some of the
public stub companies has been the fact that the
entrepreneurs may not want to own certain assets or certain
combinations of assets with maybe slower growth, or they
may perceive them as being slower growth. Does this change
this at all now that you've got all of these kind of
similar natured companies under the same kind of thing in
the long run?
B. Diller We've thought about this, as I think you all know, and I
would think in the next year we will think upon it again.
There is, of course, probably a simplicity that could be
gained in putting all of the assets, so to speak,
together. We're certainly going to look at it. There are
reasons to do it, and there are some reasons not to. We
won't do it from the first hour of the first day, but we've
got a lot of process to get through.
What I think you will see through this process is a much more
simplified, so to speak, structure in terms of how we operate
these. What they are technically is these are actually
subsidiaries because in each one, we
<Page>
USA NETWORKS, INC.
MODERATOR: BARRY DILLER
DECEMBER 17, 2001/8:15 A.M. CST
PAGE 9
control those entities. So, whether or not we roll them up or
not is something for us to contemplate, which we will do, I
would say, at some point. We've been doing it as we go, but I
would think we'd turn to it sometime probably after the first
or second quarter.
As far as your first question, which related to Vivendi
Universal Entertainment, with me here is Guillaume Hannezo,
who is the Chief Financial Officer of Vivendi, and he will of
course answer this, since I wouldn't even begin.
G. Hannezo The sale of Vivendi Universal Entertainment will be in the
range of $7 billion with EBIT DA between $1.3 and $1.4
billion. Its value for the purpose of this transaction has
been computed at $22 billion or less the debt, which is
between $18 billion and $19 billion; enterprise value $22
billion, which consists of the $12 billion...by USA Network,
and $10 billion put on USG.
Coordinator Niraj Gupda, you may ask your question. Please state your
company name.
<Page>
USA NETWORKS, INC.
MODERATOR: BARRY DILLER
DECEMBER 17, 2001/8:15 A.M. CST
PAGE 10
N. Gupda Good morning, and congratulations. Niraj Gupda from
Salomon Smith Barney. The first thing was just, Barry,
obviously you are spending your time on both companies, and
you talked to that at length, but how do you see both
companies being able to work together to create even more
value for USA Interactive going forward just in terms of
leveraging the assets of the new Vivendi partnership?
Secondly, you guys obviously have a big war chest, and I was
hoping you could just speak a little bit to some of the
vertical opportunities, just in general, that you're not in
today that you would like to be in going forward, in terms of
the commerce marketplace and how you think, generally
speaking, valuations look in that sector in general.
B. Diller As to the second question, it would not probably be the
best idea for us to talk about what we're going to, so to
speak, go after or look to. We are in conversations right
now that go across the range. You have to look also to the
indication of the areas that we've already developed, and
our sensibility, which is to only engage in Internet life
that is on a real business basis with real margins, either
at the outset, or real margins that we believe will be able
to be developed over time. I would say that the active
discussions that we have are certainly more than a dozen,
and they do go
<Page>
USA NETWORKS, INC.
MODERATOR: BARRY DILLER
DECEMBER 17, 2001/8:15 A.M. CST
PAGE 11
throughout the range of activities. I think it would be
inappropriate for us to be any more specific now, except to
say that there is a great deal of opportunity out there.
B. Diller For the first question, we're going to execute commercial
arrangements with Vivendi Universal as part of this, and I
think there is much that we can do, particularly, I think
in this regard, outside the United States where the
businesses that they are in complement very much the
Interactive businesses that we have that have yet to
develop in a substantial way outside the United States
other than Home Shopping, which is already now worldwide
for us in eight languages and countries from China, Japan
to almost all of Europe, with one significant territory
that is not developed, in Spain, which is very much
developed in the United States with HSN Espanol. So, I
think that there is a natural alliance here that is going
to make sense, I think, for both of us.
N. Gupda Barry, if I could ask one last question. You've started a
lot of networks over the years, or at least played a role
in creating a couple of big assets over time. As Vivendi
does cable networks that have a commerce twist to them, how
that might be allocated in terms of the upside that would
go to USA Interactive versus Vivendi core?
<Page>
USA NETWORKS, INC.
MODERATOR: BARRY DILLER
DECEMBER 17, 2001/8:15 A.M. CST
PAGE 12
B. Diller I am glad you asked if there's confusion. The definitions
are very clear here. In terms of the future ability to
develop assets, everything on the commerce side, or the
transaction side, is in the USAI province, and everything
on the entertainment side is in the Vivendi Universal
Entertainment side. In addition to that, of course,
Vivendi has its own Interactive assets, which are separate
and apart from us, but the television channels or services
that we develop on the commerce side, of which we plan to
develop at least two in the very near term, with one
already announced, travel, and in another area we are soon
to announce, those will be owned and operated solely by USA
Interactive, and part of the USA Interactive business.
Coordinator Gordon Hodge, you may ask your question. Please state your
company name.
G. Hodge Thomas Russell Partners. Just a question on the taxes, if
could you just quantify the amount that is being deferred,
and you said it's all being covered by the cash payments on
the preferred?
V. Kaufman Yes. I think the taxes are probably around $1.4 billion,
but they're payable between 15 and 20 years out in time,
and the cash dividends that we're
<Page>
USA NETWORKS, INC.
MODERATOR: BARRY DILLER
DECEMBER 17, 2001/8:15 A.M. CST
PAGE 13
receiving start at over $60 million a year and actually get up
to over $100 million a year towards the end, so that aggregate
sum well exceeds the tax that we're going to pay on all of the
instruments.
G. Hodge Terrific, and then I just had a follow up. I didn't hear
perfectly the valuation, or I guess the balance sheet, of
VUE--the debt number, you said $22 billion enterprise value, I
think $1.3 billion to $1.4 billion in EBIT DA, and then I
missed what the debt number was.
V. Kaufman It was $2 billion.
Coordinator David Lions, you may ask your question. Please state your
company name.
K. Stuponious It's actually Kathy Stuponious. Victor, just a couple of
housekeeping questions. Can you go over what the ownership
stake will look like in the USA shareholder base, including
yourself, Liberty Media, and what's going to float? When
do you expect the deal to close? I don't think there are
any major regulatory hurdles other than Hart-Scott-Rodino.
Finally, a question for Barry. If you look at basically your
ownership stakes in Interactive, as well as in Vivendi
Universal Entertainment, you
<Page>
USA NETWORKS, INC.
MODERATOR: BARRY DILLER
DECEMBER 17, 2001/8:15 A.M. CST
PAGE 14
obviously have a lot of your net worth tied up in Interactive,
and it sounds like there is a minimum value to your stake in
VUE. Is that a correct assumption, and isn't the Interactive
portion a lot bigger?
V. Kaufman Kathy, as to the first question, we're going to have
outstanding around 427 million shares. Liberty is going to own
20% of that, and other than Liberty, most of the float really
stays as it is today, so I think that we have an extremely
favorable float situation. I think the timing of the
transaction, as there will be a shareholder vote by our
shareholders, we would hope to conclude the transaction during
the first quarter of the year.
B. Diller Specifically, Liberty will have 18.6, Microsoft post
Expedia will have 3.3, I will have 7.4, and the public will
have 59, approximately. As it relates to my own holdings,
I am not selling any stock. I have, between owned and
optioned stock, shy of 50 million shares of USA. I have an
interest in VUE, Vivendi Universal Entertainment, which is
a little over 1%, which has a base value of $275 million.
It has puts and calls attached to it. Everybody can do
their own addition. I have economic incentives in multiple
places, as I said earlier, and as I think would be clear to
all, I think that there are no, so to speak, conflicts in
this.
<Page>
USA NETWORKS, INC.
MODERATOR: BARRY DILLER
DECEMBER 17, 2001/8:15 A.M. CST
PAGE 15
I saw one report today, which said, "What are going to be the
agreements in terms of conflicts?" There really aren't any
here. What we have done is we have very carefully divided the
definitions in terms of the scope of the businesses in terms
of how each area can compete in those businesses--that's
absolutely clear. We will have commercial agreements between
the two, which will tie us together in various ways, which are
to the benefits of both sides. Other than that, the issue for
us is to start to work and start building the assets. There is
no government issue here. We will go through some of the pro
forma things, and as soon as we possible can, we will get on
to light and business.
Coordinator Jeff Lawson, you may ask your question. Please state your
company name.
G. Clowery Gerard Clowery. Congratulations, Barry and Victor. When might
the Expedia transaction close now? Obviously there has to be a
new amendment to the proxy statement.
B. Diller We think about two months. I think we have to re-mail, so to
speak, and then the transaction proceeds.
<Page>
USA NETWORKS, INC.
MODERATOR: BARRY DILLER
DECEMBER 17, 2001/8:15 A.M. CST
PAGE 16
G. Clowery Secondly, Barry, where is your heart? Is your heart really
in the entertainment side of the business, or is it in the
Interactive side? I'm just trying to get sense of where
your affection really lies.
B. Diller I have talked about this heart issue before, so I'll tell
you what I've said before. This transaction absolutely
follows that. I have said over the last several years that
it may be odd, but it is true--I have two real hearts going,
and they are fairly fullblooded. I have had an
entertainment heart going since I was 20-years-old. I'm
still curious, and I'm still interested in it, and it's
still something that I think has enormous potential,
particularly in this period of consolidation and
concentration, given now the ability for Vivendi Universal
strategy to really compete anywhere in the world at any
level with anybody's assets. That's definitely an area
that interests me.
On the Interactive side, since the day I left FOX I have been
genuinely interesting in interactivity. I was not a latecomer
to the party; I came to it three years before there was an
active Internet life, much less the two years after it when
there was an Internet explosion. I am fascinated by
interactivity. Those who know me and talk to me and hear me
and who are around me almost say, "Shut up, we've heard enough
about this." So, I
<Page>
USA NETWORKS, INC.
MODERATOR: BARRY DILLER
DECEMBER 17, 2001/8:15 A.M. CST
PAGE 17
really do believe, when as you say, "Where is the heart," that
that's where the heart is.
As I have said before, and will probably have to keep saying,
although I say it because I recognize that people say, "Well,
how are you going to do both of these things," I don't think
that's the issue here. As I said, I've been doing about half
and half anyway, and we've built a hell of an Internet
business with half, so to speak, my time. As I've also said,
time doesn't run in halves or quarters or anything like that.
I am absolutely sure that on the USA Interactive side, we are
going to grow this business. This business is at the most
interesting, wonderful, opportunistic time for a company such
as ours, organized as we are, with the kind of people who are
inside this company throughout all of our Interactive assets,
so I have no issues, nothing that I would in any way worry
about as it relates to my being the Chief Executive of USA
Interactive.
On the VUE side, we have all talked about that, and I think
that has got some terrific potential, too, and as I said
earlier, I am going to have time left over to do the other
parts of my life, which some of you who know me know I do
certainly in and under the water with some vigor.
<Page>
USA NETWORKS, INC.
MODERATOR: BARRY DILLER
DECEMBER 17, 2001/8:15 A.M. CST
PAGE 18
Coordinator Sharon Williams, you may ask your question. Please state your
company name.
S. Williams AG Edwards. In the past, you've had a fairly large portfolio
of developing assets, some with losses expanding as you
develop them and others getting near to EBIT DA positive and
popping up to the developed side. Do you think now that you
don't have the stability of the cable networks cash flow that
that's something you will pursue less aggressively, or how do
you view your developing asset portfolio?
B. Diller I would think that we certainly have the capacity and
ability to increase it. We certainly won't decrease it.
Developing assets either turn into real assets, or you
admit your mistakes and you move on. In our case, we have
had, I would certainly say, less mistakes than many others
have. We have had a few, of course, and they have been
very small. We very much as a company believe that you've
got to in some cases, and should, start from scratch with
original creation, and take your chances with things.
As you all know, we are pretty conservative, and we're fairly
hawkeyed on being careful when we actually put money on the
table, much less we put equity on the table. So, we'll
continue to do it, but we'll do it in the way
<Page>
USA NETWORKS, INC.
MODERATOR: BARRY DILLER
DECEMBER 17, 2001/8:15 A.M. CST
PAGE 19
we've done it in the past, which hopefully we'll have few
mistakes, though there will be mistakes made--there will be
business that don't come to term--but hopefully it will be
balanced by an awful lot that do, as has happened in the past.
J. Miller I just want to make a point of fact. If you look at our
published 2002 budget, the developing or emerging businesses,
the losses in that category are almost approximately half of
what they were in 2001. Just as a point of fact, these
businesses are tending in the right direction in each case.
Coordinator John Dean, you may ask your question. Please state your
company name.
J. Dean Loomis Sales. Could you talk a little about your pro forma
balance sheet, including any acquisitions that you've already
announced, and also give me an idea of what you think EBIT DA
will be in cash as well as the value of the Vivendi shares?
V. Kaufman In terms of the balance sheet, it's extremely strong. We have
over $600 million of net cash now, this transaction will add
to that about $2.5 billion of additional cash, and we'll have
$3 billion. We're in a very, very strong position. I'm not
sure I understand the second part of the question.
<Page>
USA NETWORKS, INC.
MODERATOR: BARRY DILLER
DECEMBER 17, 2001/8:15 A.M. CST
PAGE 20
J. Dean How are you valuing the Vivendi shares?
V. Kaufman The shares that we repurchased?
J. Dean No. I think that you're getting shares of Vivendi?
V. Kaufman No, we're getting shares in the joint venture, which is VUE,
and we're valuing that based on an enterprise value of $22
billion with some debt that's attributed to it.
J. Dean How much debt do you expect to have on your balance sheet
including the effects of any acquisitions that are
pending?
V. Kaufman As I said before, we don't have net debt today--we have $500
million of outstanding of public debt. Our debt on a net
basis will not be in excess of $1.2 billion or two times
our EBIT DA now, and I think as we do acquisitions, we will
use the cash that we have and not really increase the debt
beyond that, and we believe that we can do acquisitions to
really buy very strong EBIT DA or businesses that are about
to enter the profitability stage. We think ultimately, as
we use this cash, that we'll be able to do
<Page>
USA NETWORKS, INC.
MODERATOR: BARRY DILLER
DECEMBER 17, 2001/8:15 A.M. CST
PAGE 21
acquisitions with net multiples of ten and below, which when
translated into our company should translate into greater
value for us.
J. Dean So, the debt outstanding roughly is around something over
$500 million?
V. Kaufman Yes, in terms of actual debt.
Coordinator Max Lew, you may ask your question. Please state your company
name.
A. Richards Actually, it's Amy Richards. I hate to go back to the debt
issue, but I know, Victor, you mentioned on the previous call
that the outstanding debt would remain obligations of USA. Can
you actually split off the major assets of USA Networks and
Sci-fi channel without tripping any of the covenants under the
bank indenture?
V. Kaufman Yes, we can. I would think that bondholders would be extremely
happy. That debt has always been guaranteed by the parent
company, and I think everyone has always looked at all of the
assets, and now the assets that we have include an extremely
large amount of cash, and we're not going to use that cash to
buy really, really high multiple businesses. We're going to
use the cash to buy EBIT DA, so I think that over the course
of the next 12
<Page>
USA NETWORKS, INC.
MODERATOR: BARRY DILLER
DECEMBER 17, 2001/8:15 A.M. CST
PAGE 22
to 18 months that we're going to be actually replacing the
EBIT DA of the businesses we just sold.
Coordinator Jetsen Joshi, you may ask your question, and please state your
company name.
J. Joshi Good morning. Jetsen Joshi from JP Morgan. Just to follow on,
then, the $500 million in debt will stay with USAI, and the
numbers you gave earlier in the call were related to that
entity, which was $4 billion in revenue growing to $5 billion,
and cash flow going from $600 million to $800 million? Is that
correct?
B. Diller Yes, that is correct.
J. Joshi At the same time, a little bit later in the call you did
say that losses were narrowing in some of the less mature
Interactive businesses. On these projections, it seems
like the EBIT DA margin is staying flat essentially year
over year, which doesn't necessarily indicate an ongoing
improvement in some of the loss producing business or some
of the less mature businesses. Could you just flesh out a
little bit more of the 2003 projections? Does that include
some amount of acquisitions, or is it just the base
business here?
<Page>
USA NETWORKS, INC.
MODERATOR: BARRY DILLER
DECEMBER 17, 2001/8:15 A.M. CST
PAGE 23
V. Kaufman It's just the base business. It doesn't include any
acquisitions at all, and I think once we factor in
acquisitions, the growth rate, which is incredibly strong
growth on the EBIT DA line for our operating businesses, I
think, will even become stronger. We are really poised to grow
at a very strong rate.
B. Diller Margins on the operating business go from 13.1 in 2001, to
14.4, we believe next year, to 15.5 in 2003. That's not
bad growth.
J. Joshi So, the hundred basis point improvement is going to
continue into 2003? I was perhaps rounding some of the
margin numbers, but that's kind of what you're expecting
into 2003?
V. Kaufman Yes, and as I said, I think we will do better than those
numbers as we factor in acquisitions.
Coordinator Sam Morely, you may ask your question. Please state your
company name.
<Page>
USA NETWORKS, INC.
MODERATOR: BARRY DILLER
DECEMBER 17, 2001/8:15 A.M. CST
PAGE 24
R. Sing It's Rick Sing at Carsh Capital. I just want to make sure I
understand the remaining entity completely. Based on your
current capital structure, you have 427 million shares, $3.3
billion in cash, and about $500 million in debt. When you talk
about the $600 million in EBIT DA, what operating assets does
that include? Does that include the consolidation of Room and
the Ticketmaster Online, or is that just the operating assets
that you don't have public equity stakes in?
V. Kaufman No. Those are the operating assets that we consolidate, and we
consolidate all of the publicly traded subsidiaries.
R. Sing What is the EBIT DA of the assets that aren't publicly
traded?
B. Diller For 2002, it's $360 million, and for 2003 it's $460 million.
R. Sing Does that include the losses from the developing assets?
B. Diller No.
R. Sing What would the losses from the developing assets be?
<Page>
USA NETWORKS, INC.
MODERATOR: BARRY DILLER
DECEMBER 17, 2001/8:15 A.M. CST
PAGE 25
B. Diller In 2002, $69 million, and in 2003, $39 million.
Coordinator Victor Miller, you may ask your question. Please state your
company name.
V. Miller Victor Miller, Bear Stearns. Just a follow-up on free cash
flow. What's the impact of free cash flow here, because
obviously you won't have the programming investments, which
have been substantial? What's the impact of cap ex? Then, out
of the cable fees for broadcasting cable, how much of that has
been related to USA and Sci-fi side? Again, on the tax side,
you've also paid taxes to Vivendi for its portion of the
taxable income on the USA holding now that that's gone. What's
the overall impact of free cash flow? It seems like it would
be positive, yes?
V. Kaufman I think it would be extremely positive. The only real
deductions from the EBIT DA are cap ex, which are significant
but not huge. I would say it would probably range in the $100
million-plus category, so we would have very significant free
cash flow going forward.
Coordinator Our final question comes from Alan Katzen. You may ask your
question, and please state your company name.
<Page>
USA NETWORKS, INC.
MODERATOR: BARRY DILLER
DECEMBER 17, 2001/8:15 A.M. CST
PAGE 26
A. Katzen Barry, it's Morris Mark and Alan Katzen. First of all,
congratulations. Secondly, one thing I didn't quite understand
is USA will now have a minority interest in Vivendi Universal.
If Vivendi Universal is not a public company, how will USA
benefit from that, and how will you ever be able to either
personally, or from the viewpoint of USA, monetize that
investment?
B. Diller On the USA side is an investment in Vivendi Universal
Entertainment.
A. Katzen Exactly. That's not a public company.
B. Diller It is not a public company, but there are puts and calls that
come into effect in five and eight years respectively to
monetize that asset. We're certainly hopeful that over that
period it will grow, and we have not done a very good job if
it did not substantially grow. As it relates to my interests,
there are puts and calls that begin essentially in year two.
If that answers fully that question, then I would like to
thank you all. We are available on and off line as we wind our
way through this day to talk with you about any and all. We
only in summation say, that I think we've
<Page>
USA NETWORKS, INC.
MODERATOR: BARRY DILLER
DECEMBER 17, 2001/8:15 A.M. CST
PAGE 27
just, so to speak, set free the power of USA Interactive, and
I think you'll see that develop over the next period fairly
quickly.
I, with my colleagues at USA Interactive, who will be the name
of the company, will look forward to talking with you and both
telling you what our plans are and answering any questions as
we go. For now, thank you for being interested and being on
the call.
Coordinator That concludes today's conference call. You may now disconnect
at this time.