Silver King, HSN to merge

August 26, 1996: 5:24 p.m. ET

Companies reunite in $1.27 billion deal under Barry Diller's leadership

NEW YORK (CNNfn) - Silver King Communications Inc. and Home Shopping Network Inc. say they have entered into a definitive merger agreement that will reunite the two companies which split in 1992.
     Under the $1.27 billion deal, which supersedes a previous agreement for Silver King to purchase only Liberty Media's controlling interest in the shopping network, HSN will become a subsidiary of Silver King.
     The deal must still be approved by both Silver King and HSN shareholders.
     "At no risk of overstatement, this is a complex transaction," said Barry Diller, who is chairman of both Silver King and HSN.
     According to the terms announced Monday, holders of HSN common stock will receive 0.45 shares of Silver King for each share. Each share of HSN Class B stock, which has 10 votes per share and is held solely by Liberty, will be converted into 0.54 shares of Silver King Class B stock.
     Liberty Media will not be allowed to own more than a 21.37 percent equity stake in Silver King without first being granted Federal Communications Commission approval. Liberty will be prevented from exchanging its 18.3 million HSN shares for Silver King securities.
     Liberty Media will retain a 19.9 percent minority interest in HSN which will be converted in a tax-free transaction for additional Silver King shares as soon when FCC permission is granted.
     Diller, a highly successful television programmer credited with the Fox network's popular lineup, also ran Paramount Pictures in the late 1970s and early 1980s. He later became chairman of QVC Inc., a cable home shopping network, a job he held before taking control of Silver King in August 1995.
     Home Shopping's sales have been flat for several years, but the company posted a second-quarter net profit of $5 million in July -- a boost largely credited to Diller's efforts to revive the ailing TV retail outlet.
     Home Shopping Network's shares were up 1/8 to 11-3/8, while Silver King's shares were down 1-1/2 to 28.