Universal Chief Insists New Boss Diller Won’t Meddle in Management

Ron Meyer appears to have landed a devil’s deal as part of the $10.3-billion sale of Barry Diller’s USA Networks Inc. entertainment operations to Vivendi Universal announced this week: In one fell swoop, he gains responsibility and loses authority.

Meyer, the president of Universal Studios, gets a clutch of premium television assets from USA Networks to add to his movie studio and theme park domain. With Diller as his new boss, he also gets a renowned micro-manager with a lust for internecine sparring.

In an interview at his studio office Tuesday, the former talent agent, however, stressed that he doesn’t expect Diller to meddle.

“The assurances that I got from Barry and Jean-Marie are that we will be able to run the studio as we have been running it,” said Meyer, referring to Vivendi Universal Chairman Jean-Marie Messier.

Meyer noted that he made maintaining the status quo a condition of his recently negotiated five-year contract. “That, for me, was the most important thing.”

Then Meyer added a qualifier: “Obviously, if we start doing things wrong, I expect someone to come in.”

After a winning streak with hits such as “Erin Brockovich” and the “American Pie” and “Mummy” series, Universal Pictures faces a less impressive 2002. Next year’s lineup--featuring “Scorpion King,” starring pro wrestling star the Rock; rapper Eminem’s film debut in “8 Miles”; and a third Hannibal Lecter film--has Messier couching his enthusiasm.

Other concerns include a down economy that has hurt attendance at Universal’s theme parks and a tourism trade that hasn’t rebounded in the aftermath of the Sept. 11 terrorist attacks.

Messier, a former investment banker in France, has picked up on industry code quickly. At a news conference in Los Angeles on Tuesday, Messier signaled that next year’s films aren’t expected to work as well as those released during the last two years.

“We all know this is an industry of risk,” he said. “After two years of exceptional successes, 2002 looks great. 2003 looks potentially outstanding.”

Messier said he has continued confidence in Meyer and studio chief Stacey Snider. He made a point of saying the deal was “discussed well in advance” with Meyer.

For his part, Meyer said in the interview, “I was only involved in the decision in encouraging Jean-Marie to do the deal. Had I not encouraged him to do it, my guess is he would have done it anyway.”

Talks with Diller began during the first meeting between Messier and Diller only weeks after Vivendi bought Universal from Seagram Co. a year ago. At Thanksgiving, they closed the deal via cell phone.

“Barry was on his boat close to Cuba, and I was on the beach in the Bahamas. It was futuristic,” Messier said.

Wall Street continues to warm to the USA Networks deal. Vivendi stock continued to rebound Tuesday, rising $1.37 to $53.47 on the New York Stock Exchange. USA Networks gained $1.84 to $26.86 on Nasdaq.

At the news conference, Messier said further acquisitions after the $1.5-billion purchase of 11% of satellite TV firm EchoStar Communications Corp. and the USA deal would be “small and strategic.”

“Barry is going to be working on a much bigger picture, creating shareholder value for this company,” Meyer said, noting that Diller is not expected to have direct involvement in the operation of the studio or theme parks. “That’s not a good use of his time.”

Both men are Los Angeles natives who launched their careers at the fabled William Morris Agency. Meyer, 57, and Diller, 59, rose through Hollywood at the same time. While Meyer was building the powerful Creative Artists Agency with partner Michael Ovitz, Diller worked at ABC, Paramount and then Fox Inc. Until Diller sold his Malibu home a year ago, the two were next-door neighbors in the oceanfront community.

“Barry and I know each other very well,” Meyer said. “He comes to my house to see a film and have dinner. I know Barry’s wife; he knows my wife; Barry knows my mother.”

Meyer has no plans to change his ways at Universal, apart from adding USA Networks cable channels and television production operations to his stable.

“My style is to empower the divisions to run their businesses,” he said. “I’m the mayor of this city and the coach of each division ... and I’m looking for USA Networks to be part of the team.”

Meyer said he has enjoyed autonomy at Universal. “I’ve been given a budget, and I’ve been allowed to run a business based on that budget. If you can be profitable and keep the company running efficiently, good management wants to let you do that.”

“It filters down. My management treats me that way, and I treat my divisions that way,” Meyer said. “And now I have Barry Diller. I don’t anticipate any change.”

The combined staffs of USA Networks’ entertainment divisions and Universal Studios dovetail nicely, Meyer said, with the exception of three redundant specialty film divisions.

Universal Focus released last year’s hit “Billy Elliot.” USA Films scored last year with “Traffic.” Studios Canal finances films produced by Ovitz’s Artists Production Group. No decision has been made on how to meld these staffs, Meyer said, except that the group will report to Snider.