• by March 22, 2005

ANNALS OF BARRY DILLER - It's hard to believe its been 12 years since The New Yorker columnist Ken Auletta penned a profile on estranged Hollywood mogul Barry Diller's "Search For The Future." A lot has changed since that article was published. Some things haven't. But if you were told then that Diller's biggest deal today would be acquiring a second-tier search engine at a time when Microsoft was trying to muscle into a market dominated by two players - Google and Yahoo! - each with market caps more than twice the size of General Motors Corp.'s, we would have said, "What's a search engine?"

Of course, that was in the period before Google. Even before Yahoo! and MSN. It was the days of 2,400, 4,800, 9,600 - or if you were lucky 14.4 - bits per second of modem speed and the clunky dial-up interfaces of CompuServe, Delphi, and Prodigy, as well as a second-tier online service called America Online.

Today, we all know that search is the fastest growing sector of the fastest growing medium - online - but that still doesn't explain Diller's latest move. To understand that, you need to turn back to the dog-eared pages of the Feb. 22, 1993 edition of The New Yorker's "Annals of Communications" column to get a true glimpse of those days of future past. If you can't find it, we'd be happy to loan you ours. Better yet, go to Auletta's site and read it in the manner he predicted you might 12 years ago: digitally and on-demand.

Just in case you don't have the time to read it yourself, we've re-read it and pulled out some of the major predictions that have, or have not yet happened. Judge for yourself.

Diller predictions that have happened (or are about to happen):

"He could see how technology, with incredible speed, was transforming dumb television sets into smart ones, making it possible for viewers to select, organize, and interact with programming and information rather than passively consuming what was offered on 50, or even 500, channels."

"In the next few years, he came to understand, viewers will receive video on demand -- be able to watch what they want when they want. With the click of a remote control or a telephone button, they will summon up movies from the equivalent of a video jukebox. In an instant, they will send for and receive a paperless newspaper, a program they missed last night, a weather report."

"If he fulfills his vision at QVC, he'll be the richest person any of us know," says Jeffrey Katzenberg, the chairman of Walt Disney Studios, who is a close friend. "Barry Diller will be worth many billions of dollars."

(Editor: Diller's IAC Interactive Corp. had a market cap of $15.3 billion, according to Yahoo! Finance on Tuesday.)

"One day, he speculated, the computer screen might become a TV set, and the keyboard would be a mechanism for summoning anything. The speed would be astonishing. A billion bits of information per second would travel over a wire."

"These bits of information would perhaps be retrieved by a powerful microprocessor in a cable-converter box inside or beside the screen, and perhaps computer software would make remote-control devices user-friendly, like a computer mouse, permitting viewers to choose what they watch not only by surfing among 500 or more channels but also by specifying categories -- movies, comedy, sports, books, information services."

"He realized that each one hoped someday to control either the wire highway to each home or the switching mechanism that would someday direct video traffic or the computer data bases that would serve as a library or the technology that converted pictures and programming to digital signals and back again. He knew that the current system of sending analog signals to TV sets would eventually be replaced, because these electrical impulses took up too much space on the highway, or bandwidth, that they traveled over, limiting the number of channels."

"Diller traveled on to Fremont, and there he toured the NeXT Computer plant and had dinner at the Palo Alto home of its founder, Steven P. Jobs, who was seeking to re-create the success he had had when he co-founded Apple, in 1975. After studying NeXT's brilliant software and graphics  'It's the most magical computer,' Diller says -- he recalls telling Jobs, 'You've made this thing too hard. It shouldn't be this hard.'"

"One day soon, he said, technology would make possible a digital-compression box 'more powerful than any P.C.,' and will transform the TV set into 'an input/output device.' He went on, 'The TV remote control will become like a computer mouse. You've got to personalize television. If there are 500 channels, you can't just give the consumer a scroll. That's the world of the future.'"

Things that didn't work out exactly the way Diller envisioned them:

"Apple Computer already had a joint venture with Sharp Electronics, Pacific Bell, Random House, Motorola, Bellcore, and SkyTel, to provide software and communications through the hand-held personal digital assistant, which Apple is calling the Newton. Toshiba, a Japanese electronics conglomerate that excels in appliances and P.C.s, owned a minority stake in Time Warner. Sony made consumer electronics and owned a film studio and a record company, and so did Matsushita."

"The first of Diller's field visits was to San Mateo, California, to see an electronics company called 3DO. The date was May 13th. 3DO has developed what it calls a universal box -- a device that will make home-entertainment and computing equipment compatible, and able to communicate with each other."

"The future, Diller concluded, would be 'led by the cable systems.' Sixty-three per cent of all American homes were already wired for cable. Cable companies could charge for much of their programming, by pay per view, thereby perhaps alleviating government concerns about steep cable prices."

"The direction the video business is taking is toward lessening the power of the middleman. Networks and independent stations are middlemen, in that they schedule programs on certain days and at certain hours, or give the viewers the news they deem important. Consumers watching what they want when they want will gain a sense of participation, of empowerment. To this end, Diller envisions QVC providing viewers with news stories that present more historical sweep and context, and also with instant news. 'Information services are something I plan to have a real role in,' he says.

"Diller also says that in several years he expects to be 'in the storytelling form as well.' He is sure that there will be some interactive element. He is uncertain at the moment whether his entertainment programs will be distributed over QVC channels or sold as packages. 'That's around a dark corner,' he says.