USA Nets' profits up

Networks and studios division key to big boost

By MARTIN PEERS

Barry Diller's USA Networks boosted its fourth-quarter net profit to $50 million from $3 million, the company said Thursday, due mainly to a $109 million onetime gain on the merger of Ticketmaster Online with Citysearch and the subsequent public offering of the merged company.

USA Network, the Home Shopping Network and Ticketmaster all had a strong quarter. USA's total cash flow -- earnings before interest, taxes, depreciation and amortization -- rose 9% to $140 million after taking into account $23.6 million in losses from several startup Internet businesses and its newly relaunched Miami station. Excluding those losses, USA's cash flow rose 15% to $164 million.

The biggest contributor was the "networks and studios" division, which includes USA and Sci-Fi cable nets and the USA studio, whose cash flow rose 3.9% to $90.6 million on 0.5% lower revenue of $328.4 million (adjusting for the timing of USA's acquisition of the business last February).

USA noted that the cash flow for the cable networks alone rose 10.7%, while revenue rose 8.8%, but the division's bottom line was hurt by higher production costs and lower video sales compared to the previous year. USA had released the "Jerry Springer" video in the fourth quarter of 1997, the company noted.

The studio division is doing a lot more production for the network but is selling less product to outside buyers as a result, hurting its earnings in the short term, a USA spokesman said.

The company said "popular original programs" for the USA cable channel lifted its average primetime rating by 10% in the quarter.

For the year, the networks and studios division cash flow rose 39% to $330.3 million on 12.2% higher revenue of $1.2 billion.

The strongest performance in the quarter came from the HSN electronic retailing division, whose cash flow rose 42.3% to $60.9 million on 14% higher revenue of $314.2 million -- "the most profitable quarter in (HSN)'s 22-year history." Electronic retailing cash flow for 1998 as a whole rose 8.6% to $180.4 million.

USA's Ticketmaster operations reported 10.5% higher revenue and 25.7% increased cash flow in the quarter, combining both online ticketing and traditional business. Ticketmaster is steering more business online, the company said, raising the proportion of ticket sales done online to 6% from 2% a year earlier.

That increase was reflected in cash flow of $3.2 million for online ticketing compared with $1.1 million a year earlier. In comparison, traditional ticketing operations increased cash flow 11.6% to $14.3 million.

Losses from USA's broadcasting division trebled to $7.7 million in the quarter, reflecting costs of launching USA's CityVision local programming format at WAMI in Miami. For the year the broadcasting division lost $23 million, up from $4.7 million in 1997.

USA's other startup businesses, all Internet-related, lost a total of $15.9 million in the quarter and $53.7 million in 1998 as a whole.