Diller buying Trio
USA Networks moves to fill underserved arts niche
By John M. Higgins -- Broadcasting & Cable, 5/21/2000 8:00:00 PM
Betting that he can dance where many others have stumbled, Barry Diller is planning to use tiny Canada-based Trio as the platform for an arts-oriented network.
Diller's USA Networks Inc. agreed to pay about $103 million for Trio and sister service Newsworld International from a joint venture of government-run Canadian Broadcasting Co. and private media company Power Corp. The transaction is a rare sale of a stand-alone digital cable operation and could be an important benchmark.
The big play is Trio. Diller and USA Cable President Steven Chao have spent two years looking for an artsy cable play. They see the arts sector as one of the few neglected programming niches on television.
"Barry conceptualizes it as something a little less serious than PBS and a little more serious than E!" said Bear, Stearns media analyst Victor Miller. "I think he's taking a low risk."
Chao said he envisions programs and live performances in theater, dance, rock, jazz and less popular music." We think it's just not serviced."
It's not for lack of trying. Chao and Diller will be following a well-worn path. The "A" long ago dropped out of A & E, formerly Arts & Entertainment. Movies have largely pushed out ballet and other performing arts on Bravo. Even superstar packaging of opera stars gets crowded out by science and dramas on PBS.
Chao's plans for Newsworld are less clear, though the company has told analysts that the channel will focus more on longer-form documentaries and news features than it does today. Reprogramming the networks will cost at least $200 million. Patrick Vien, president of both networks, will stay on and report to Chao.
With fewer than 1 million digital cable subscribers each, the two networks have around 6 million total subscribers each. That values the networks at roughly $20 per subscriber. Surprisingly, with no advertising and limited distribution, they make money, about $1 million in cash flow on about $20 million in annual revenues. It's hard to tell how much of that is subsidized by favorable programming and news deals with the CBC, however.
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