SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant /X/
Filed by a party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, For Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/X/ Soliciting Material Pursuant to Section 240.14a-12
USA NETWORKS, INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(4) Date Filed:
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Slide 1
USA Interactive
Goal: 20% of all Interactive Commerce
USA Interactive will be the new name of USA Networks, Inc. upon closing of the
transaction in which the entertainment businesses of USA Networks, Inc. will be
contributed to a joint venture with Vivendi Universal.
Prepared 1/29/02 - Read important disclaimer
Slide 2: USA Interactive
Electronic Retailing: (logos) Home Shopping Network, America's Store, Home
Shopping Espanol, Shop Channel, HSN.com, TVSN, Home Shopping Europe
Information & Services: (logos) Ticketmaster, Match.com, Citysearch.com, HRN,
USA ECS, Styleclick, Expedia, Inc. (Transaction pending), PRC
Pro forma for pending Expedia transaction. Includes some companies majority or
partially owned by USA. USA Interactive will be the new name of USA Networks,
Inc. upon closing of the transaction in which the entertainment businesses of
USA Networks, Inc. will be contributed to a joint venture with Vivendi
Universal.
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Slide 3: Huge Opportunity
$ in billions
U.S. Interactive Commerce
Gross Transaction Value ("GTV")
GAGR = 24%
2001 $87
2002E $110
2003E $137
2004E $169
2005E $207
2006E $253
Source: Shop.org / BCG (5/01); PhocusWright (10/01); Comscore Networks (1/02);
Jupiter (10/01, 11/01, 4/00, 10/00); compiled estimates from various other Wall
Street analysts and internal estimates. Includes B2C online commerce, online
financial services and online classifieds.
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Slide 4: USA's Target
$ in billions
Target
2001 $87 8%
2002E $110 13%
2003E $137 17%
2004E $169 20%
2005E $207 21%
2006E $253 22%
Source: Shop.org / BCG (5/0)1; Comscore Networks (1/02); Jupiter (10/01, 11/01,
4/00, 10/00); compiled estimates from various other Wall Street analysts and
internal estimates. Includes B2C online commerce, online financial services and
online classifieds. USA budget / estimates based on USA Revised Budget as filed
with the SEC on 1/29/02 for 2002 and 2003 and internal estimates for 2004-2006;
goals for initiatives and new acquisitions based on USA internal estimates. Pro
forma for pending Expedia transaction.
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Slide 5: Growing Interactive Transactions
$ in billions
USA Gross Interactive Transactions
CAGR = 56%
2001 $6.2
2002E $14.3
2003E $23.3
2004E $33.9
2005E $44.2
2006E $56.3
USA budget / estimates based on USA Revised Budget as filed with the SEC on
1/29/02 for 2002 and 2003 and internal estimates for 2004-2006; goals for
initiatives and new acquisitions based on USA internal estimates. Pro forma for
pending Expedia transaction.
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Slide 6: How Will We Get There?
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Slide 7: Organic Growth + New Initiatives + Acquisitions
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Slide 8: Components of Our Growth (%)
$ in billions
USA Gross Interactive Transactions
2001 2002E 2003E 2004E 2005E 2006E
New Acquisitions 5% 8% 10% 11% 11%
Initiatives 1% 1% 1% 1%
Organic Growth 7% 8% 8% 9% 10% 10%
Total 7% 13% 17% 20% 21% 22%
USA budget / estimates based on USA Revised Budget as filed with the SEC on
1/29/02 for 2002 and 2003 and internal estimates for 2004-2006; goals for
initiatives and new acquisitions based on USA internal estimates. Pro forma for
pending Expedia transaction.
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Slide 9: Components of Our Growth ($)
$ in billions
USA Gross Interactive Transactions
2001 2002E 2003E 2004E 2005E 2006E
New Acquisitions $5.70 $11.10 $17.50 $22.70 $28.80
Initiatives $0.70 $1.20 $1.70 $2.30
Organic Growth $6.20 $8.50 $11.50 $15.20 $19.80 $25.20
Total $6.20 $14.30 $23.30 $33.90 $44.20 $56.30
USA budget / estimates based on USA Revised Budget as filed with the SEC on
1/29/02 for 2002 and 2003 and internal estimates for 2004-2006; goals for
initiatives and new acquisitions based on USA internal estimates. Pro forma for
pending Expedia transaction.
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Slide 10: Organic Growth
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Slide 11: Exchanges
(graphic) screen grab of Ticketmaster.com Orlando Magic tickets exchange page
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Slide 12: Online Personals: Huge Potential
Online Not Online
Singles 18+ (U.S.) 44% 56% 87 mm
Uses Online Never used
Dating Online Dating
Online Singles 18% (U.S.) 24% 76% 39 mm
Sources: US Census Bureau 1998; MRE Cyberstats Fall 2000; NPD Group Research
12/00
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Slide 13: Match: A True Gem
$ in millions
Revenue
CAGR = 67%
2000 $29
2001 $49
2002E $88
2003E $135
EBITDA
CAGR = 109%
2000 $6
2001 $17
2002E $30
2003E $55
Source: USA Revised Budget as filed with the SEC 1/29/02.
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Slide 14: Travel: Quickly Migrating Online
U.S. Online Travel as % of Total U.S. Travel
1999 1%
2002E 5%
2006E +15%?
Total U.S. Travel Today ~ $500 billion
Source: CIBC for total US travel market; PhocusWright, Shop.org and USA
estimates for US online travel market.
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Slide 15: Packaging the Merchant Model
(graphics) screen grabs of Expedia.com
Pro forma for pending Expedia transactions.
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Slide 16: Expanding HSN Online
$ in millions
HSN.com Revenue
2000 = $42
increases 200% 2000-2001
increases 40% 2001-2002E
% of HSN U.S. Sales
2000 3%
2001 8%
2002E ~10%
Source: USA Revised Budget as filed with the SEC on 1/29/02.
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Slide 17: HSN Circle of Commerce
Center: Fun, Informative, Interactive
TV, Internet, Off Air, DRTV, Catalog, Wireless, Contextual Commerce, Digital
Tiers, iTV, B&M
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Slide 18: New Initiatives
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Slide 19
Membership Clubs
Credit Cards
Loyalty / Notification Programs
65mm Name Database
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Slide 20: Acquisitions
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Slide 21: Areas of Opportunity
Interactive Commerce & Services
pie chart: USA business from largest to smallest (Travel, PCs/Electronics, TV
Elec. Retailing, Other Commerce, Mass Merchandise, Apparel, Home/Office, Event
Tickets, Personals other business (Financial Services, Auctions, Books, Music &
Video, Flowers & Cards, Jobs Classifieds, Automobile, Real Estate Classifieds
Source: Shop.org, Jupiter, MSDW , Prudential, Furman Selz, Painewebber, SSB, SEC
filings and Match.com and other internal estimates.
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Slide 22: Historical Price Performance
USA CAGR = 35%
(graphic) line chart depicting relative performance of USAI, Entertainment
Index, and Nasdaq from Dec 96 to Dec 01
Source: Yahoo! Finance. Date range is from closing of HSN / Silver King merger
to 12/31/01.
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Slide 23: Value Creation
Increase to shareholder value: $13.3 billion
Estimated annual ROI: 33%
Companies included: HSN, Ticketmaster, HRN, Broadcasting, USA Entertainment
Purchase Price = $7.2 Billion
Estimates Current Market Value = $20.5 Billion
Value of publicly traded subsidiaries based on current market values. Value of
USA Broadcasting based on purchase price by Univision. Value of USA
Entertainment based on estimated value of pending transaction. Value of other
assets based on Wall Street analyst and USA internal estimates. Does not include
pending Expedia transaction, which has not yet closed.
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Slide 24: Misses
Santa.com - $5 mm
Styleclick, FirstAuction, FirstJewelry.com - $115 mm
MXG Online - $25 mm
emachines - $8 mm
Others < $23 mm
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Slide 25: Current Trading Multiple
$ in billions except per share
USA Share Price - $27.00
Fully Diluted Shares Outstanding - 415
Equity Value - $11.2
Less: Net Cash & Investments - (3.5)
Enterprise Value - 7.7
Less: Value of Emerging Assets - (0.5)
Adjusted Enterprise Value - $7.2
2002E 2003E
AEV / Attributable Operating EBITDA 13.8x 10.5x
Pro forma for pending Expedia and Vivendi transactions. Net cash and investments
includes $750 million preferred interest in Vivendi Universal Entertainment
("VUE") and 5.4% common interest in VUE, and includes only attributable cash
from publicly-traded subsidiaries. Attributable Operating EBITDA deducts
minority interest, calculated on a fully diluted, treasury method basis, % of
EBITDA from USA's publicly traded subsidiaries.
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Slide 26: USA Potential
$ in billions except per share
Assumed Multiple 12x 14x 16x 18x 20x
2006 Attributable Operating EBITDA $3.5 $3.5 $3.5 $3.5 $3.5
Implied Enterprise Value $41.60 $48.60 $55.50 $62.50 $69.40
Less: Net Debt -1.1 -1.1 -1.1 -1.1 -1.1
Plus: 5.4% Interest in VUE 1.6 1.6 1.6 1.6 1.6
Implied Equity Value $42.1 $49.1 $56.0 $62.9 $69.9
2005 Theoretical Share price $71 $81 $92 $103 $114
Pro forma for pending Expedia and Vivendi transactions. Attributable Operating
EBITDA is defined as EBITDA from USA's Operating Businesses, less minority
interest %, calculated on a fully diluted, treasury method basis, % of EBITDA
from USA's publicly-traded subsidiaries. Assumes USA's 5.4% common interest in
VUE increases in value 12% per year. Assumes 20% of EBITDA used to repay debt.
Source: USA Revised Budget as filed with the SEC on 1/29/02 and internal
estimates. Includes new initiatives and acquisitions.
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Slide 27: Fully Diluted Shares Outstanding
Shares in millions
Assumed Multiple 12x 14x 16x 18x 20x
2005 Theoretical Share Price $70 $81 $92 $103 $114
Basic Shares Outstanding 390 390 390 390 390
Treasury Method Options 38 40 41 42 43
Dilution from Warrants and
Preferred Conversion 88 97 104 110 114
Shares Issued in New Acquisitions 809 76 72 69 66
Pro Forma Fully Filuted Shares Outstanding 596 603 608 611 614
Pro forma for pending transactions. Assumes tax savings from options and
warrants exercise, increase in options outstanding of 3 mm per year. Includes
all warrants related to Expedia and Vivendi transactions. Assumes new
acquisitions at average multiple of 13x forward year EBITDA, excluding
synergies.
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Slide 28: Important
This presentation contains forward looking statements relating to possible or
assumed future results of USA. It reflects the current views of USA with respect
to future events, and is subject to risks that could cause future results to
materially differ. These risks are described in USA's Securities and Exchange
Commission filings. Information contained herein about entities other than USA
has been obtained from sources believed to be reliable, but no independent
verification has been made and no representation is made as to its accuracy or
prmpleteness. Any statements non-factual in nature constitute current opinions,
which are subject to change without notice. The forward looking statements and
opinions in this presentation are made as of the date of this presentation, and
USA undertakes no obligation to update or revise them for any reason. These
statements do not include the potential impact of any mergers, acquisitions or
other business combinations that may be completed in the future other than
previously announced pending transactions. This presentation reflects estimates
that USA is comfortable releasing to analysts and the public as of the date
hereof.
Prepared 1/29/02 - Read important disclaimer
Slide 29: Important
USA Networks, Inc. ("USA") and Expedia, Inc. ("Expedia") have filed a joint
prospectus/proxy statement and will file other relevant documents concerning
USA's acquisition of Expedia with the Securities and Exchange Commission
("SEC"). INVESTORS ARE URGED TO READ THE JOINT PROSPECTUS/PROXY AND INFORMATION
STATEMENT AND ANY OTHER RELEVANT DOCUMENTS FILED OR TO BE FILED IN THE FUTURE
WITH THE SEC BECAUSE THOSE DOCUMENTS CONTAIN IMPORTANT INFORMATION. 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, or Expedia, Inc., 13810 SE Eastgate Way, Suite
400, Bellevue, WA 98005, Attention: Investor Relations.
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Slide 30: Important
USA has filed a preliminary proxy statement and will file 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.
Prepared 1/29/02 - Read important disclaimer