USA Networks Interested in Web Travel Co.

NEW YORK — USA Networks Inc. is close to a deal to buy a controlling interest in Internet travel concern Expedia Inc. from Microsoft Corp., significantly boosting USA’s presence in the online-travel market, Monday’s Wall Street Journal reported.

USA (USAI) also plans to buy a small travel company, National Leisure Group, and to announce plans for the launch of a new cable-TV channel focused on travel-related commerce. The value of the two acquisitions and early start-up costs on the new TV channel is close to $2 billion, according to a person familiar with the situation.

Announcement of the deals could be made as early as today, although the deals hadn’t been finalized late Sunday. Boards of USA, Microsoft (MSFT) and Expedia (EXPE) had approved the deals, however, according to people familiar with the situation.

Expedia, which offers a range of travel information and services, is expected to announce today that earnings for its fiscal fourth quarter ended June 30 will significantly beat Wall Street’s expectations. Its full earnings report is due to be released later in the month.

Microsoft is committed to selling its stake, which is about 70% before exercise of stock options, but Expedia shareholders will be given the opportunity to sell shares to USA as well. USA is likely to end up owning between two thirds and three quarters of Expedia’s stock, the people said. USA will pay for Expedia with a mix of securities including USA stock. The specific value of the Expedia offer couldn’t be learned Sunday. Expedia’s stock rose 11% to $48.70 at 4 p.m. Friday in Nasdaq Stock Market trading, valuing the company at about $3 billion. USA stock fell $1.54 to $25.26, also on Nasdaq.

A Microsoft spokesman declined to comment. Representatives for closely held National Leisure Group couldn’t be reached for comment.

The deals help USA toward its goal of becoming a leader in the interactive-commerce market, a strategy mapped out by Chairman and Chief Executive Barry Diller. USA already has a controlling stake in Hotel Reservations Network Inc., (ROOM) a publicly traded company that books hotel rooms, mostly over the Internet.

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