DILLER THRILLER USA CHIEF SPICES UP STUDIO MIX.

Byline: Greg Hernandez Staff Writer

Universal Studios President and Chief Executive Officer Ron Meyer has led his studio to another banner year. For his reward, he got a new boss on Monday: media mogul Barry Diller, who is making what is widely considered a triumphant return to Hollywood.

``I didn't think I went very far away, to be honest with you. I laugh every time I see that,'' Diller said during a news conference held in New York. But, he added, ``it does make me smile.''

Now the biggest question swirling around the entertainment industry: What impact will the arrival of Diller, widely known as a hard-driving, hands-on executive, have on what is already a winning team at Universal?

Meyer, along with Universal Pictures Chairman Stacey Snider, have demonstrated a golden touch while enjoying tremendous autonomy in leading their studio to box office success. Their most recent string of hits include ``The Mummy Returns,'' ``Jurassic Park III,'' ``American Pie 2'' and ``The Fast and the Furious.''

With Vivendi Universal's official announcement that it is buying USA Network Inc.'s entertainment assets for $10.3 billion to combine with its Hollywood-based Universal Studios, Diller becomes the new chief executive of Vivendi Universal Entertainment.

Vivendi Universal Chairman and CEO Jean-Marie Messier said Meyer becomes the company's No. 2 person in the United States and will now report to Diller. Snider and other Universal executives will continue to report to Meyer.

Fueled by the enormous success of ``Dr. Suess' How The Grinch Stole Christmas,'' Universal was last year's box office champ and has a shot at retaining the crown this year.

But industry experts agree there will most certainly be a new environment at Universal.

``This is a new recipe and no one has put these ingredients in the same pot before,'' said Marty Kaplan, associate dean of the University of Southern California's Annenberg School for Communications. ``We will all be watching to see what happens. Any change at the top will require adjustment.''

Diller ran the Paramount movie studio in the 1970s and was behind the launch of the Fox television network in the mid-1980s. He once again becomes one of the most powerful men in the entertainment business with the Vivendi deal as he takes the helm of a corporation on a mission to compete with such conglomerates as AOL Time Warner, Walt Disney Co. and Viacom.

Diller, who had once vowed never to work for another boss, also said he wouldn't have a problem reporting to Messier.

``I'm quite happy to do so,'' he said. ``It seems to be an issue of everyone else's - not mine.''

Art Rockwell, head of the Burbank investment research firm Rockwell Capital, has been watching the deal unfold during the past seven days and said he didn't expect Diller to emerge from the negotiations with the degree of power that he has.

``It's a little surprising that Diller is going to be made an executive and is being given a lot of autonomy to run it as if it is his own company,'' said Rockwell, whose firm specializes in entertainment and media. ``It will be interesting to see the chemistry.''

Diller is not expected to be a low-key boss.

``I'm not so sure it's a bad thing that Diller is a hands-on player,'' Kaplan said. ``Sometimes you can make a better deal when people are scared of you. I think (Walt Disney Co. Chairman) Michael Eisner and (DreamWorks SKG partner) Jeffrey Katzenberg are also hands-on.''

Whichever way he goes about it, many see the arrival of Diller as a win-win situation for him and Vivendi Universal.

``What Diller has is the kind of view from on high, the way on which lots of different businesses can interact with the analogy being AOL Time Warner,'' Kaplan said. ``Though clearly the Universal team in place has demonstrated strength in individual businesses, it's quite possible there is immobilized potential which Diller can really realize.''

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(color) USA Networks head Barry Diller, right, speaks and his new boss, Vivendi Universal Chief Executive Officer Jean-Marie Messier, listens during a news conference Wednesday in New York.

Stephen Chernin/Associated Press