<PAGE>
     AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 2, 2001
--------------------------------------------------------------------------------
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                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                            ------------------------

                                   FORM 10-K

                ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
                      THE SECURITIES EXCHANGE ACT OF 1934

                  FOR THE FISCAL YEAR ENDED DECEMBER 31, 2000

                            ------------------------

                                   USANI LLC

             (Exact name of registrant as specified in its charter)

                            ------------------------

                        COMMISSION FILE NO. 333-71305-03

<TABLE>
<S>                                            <C>
                  DELAWARE                                      59-3490970
       (State or other jurisdiction of               (IRS Employer Identification No.)
       incorporation or organization)

                      152 WEST 57TH STREET, NEW YORK, NEW YORK, 10019
                          (Address of principal executive offices)
</TABLE>

                                 (212) 314-7300
             (Registrant's telephone number, including area code):

          SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
                                      NONE

          SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
                                      NONE

                            ------------------------

    Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes /X/  No / /

    Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. /X/

    The aggregate market value of the voting stock held by non-affiliates of the
Registrant as of January 31, 2001: Not applicable; all of the voting stock of
the Registrant is held by affiliates.

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<PAGE>
                                     INDEX

<TABLE>
<CAPTION>
                                                                       PAGE
                                                                       ----
<S>      <C>                                                           <C>
                                  PART 1

Item 1   Business....................................................    2
Item 2.  Properties..................................................   26
Item 3.  Legal Proceedings...........................................   28

                                  PART II

Item 5.  Market for Registrant's Common Equity and Related
           Stockholder Matters.......................................   32
Item 6.  Selected Financial Data.....................................   32
Item 7.  Management's Discussion and Analysis of Financial Condition
           and Results of
           Operations................................................   33
Item 7A  Quantitative and Qualitative Disclosures about Market
           Risk......................................................   38
Item 8.  Consolidated Financial Statements and Supplementary Data....   40
Item 9.  Changes in and Disagreements with Accountants on Accounting
           and Financial
           Disclosures...............................................   62

                                 PART III

Item     Directors and Executive Officers of the Registrant..........   62
10.
Item     Executive Compensation......................................   67
11.
Item     Security Ownership of Certain Beneficial Owners and
12.        Management................................................   73
Item     Certain Relationships and Related Party Transactions........   77
13.

                                  PART IV

Item     Exhibits, Financial Statement Schedules and Reports on Form
14.        8-K.......................................................   82
</TABLE>
<PAGE>
                                     PART I

ITEM 1. BUSINESS

                                    GENERAL

    USANi LLC ("USANi LLC" or the "Company") through its subsidiaries, is a
media and electronic commerce company focused on the new convergence of
entertainment, information and direct selling. USANi LLC's principal operating
assets include USA Network, Sci Fi Channel, Studios USA, Home Shopping Network,
USA Electronic Commerce Solutions and Styleclick, Inc.

    USANi LLC's business is organized as follows:

    - CABLE AND STUDIOS. USA Cable operates cable networks, including USA
      Network, Sci Fi Channel, and two emerging networks, Trio and NewsWorld
      International. Studios USA produces and distributes television
      programming.

    - ELECTRONIC RETAILING, consisting primarily of HSN and America's Store, HSN
      International and HSN Interactive, including HSN.com.

    - USA ELECTRONIC COMMERCE SOLUTIONS, which primarily represents the
      Company's electronic commerce solutions business.

    - STYLECLICK, INC., a facilitator of e-commerce websites and Internet
      enabled applications which includes the Company's online retailing
      networks.

    All share numbers referenced herein reflect the two-for-one stock split of
USANi LLC's shares, unless otherwise specified. The Board of Directors declared
a two-for-one stock split of USANi LLC's shares, payable in the form of a
dividend to stockholders of record as of the close of business on February 10,
2000. The 100% stock dividend was paid on February 24, 2000.

CORPORATE HISTORY

    USANi LLC, a Delaware limited liability company, was formed on February 12,
1998 and is a subsidiary of Home Shopping Network, Inc. ("Holdco"), which is a
subsidiary of USA Networks, Inc. ("USAi"). USAi's common stock is quoted on the
Nasdaq National Market under the symbol "USAI".

UNIVERSAL TRANSACTION

    On February 12, 1998, USAi completed the Universal transaction, in which
USAi acquired USA Networks, a New York partnership (which consisted of USA
Network and Sci Fi Channel cable television networks), and the domestic
television production and distribution business ("Studios USA") of Universal
Studios, Inc. ("Universal") from Universal. USAi paid Universal approximately
$1.6 billion in cash ($300 million of which was deferred with interest) and an
effective 45.8% interest in USAi through shares of USAi common stock, USAi
Class B common stock and shares of USANi LLC. The USANi LLC shares are
exchangeable for shares of USAi's common stock and Class B common stock on a
one-for-one basis. Universal is controlled by Vivendi Universal, S.A., a French
corporation ("Vivendi"), as a result of the combination of Vivendi S.A., The
Seagram Company Ltd. ("Seagram") and Canal Plus completed in December 2000.

    Due to Federal Communication Commission ("FCC") restrictions on foreign
ownership of entities that control domestic television broadcast licenses,
Universal, which is controlled by Vivendi, is limited in the number of shares of
USAi's stock that it may own. USAi formed USANi LLC primarily to hold USAi's
non-broadcast businesses in order to comply with such FCC restrictions and for
other tax and regulatory reasons. Universal's interest in USANi LLC is not
subject to the FCC foreign ownership limitations. USAi maintains control and
management of USANi LLC, and the businesses held by USANi LLC are managed by
USAi in substantially the same manner as they would be if USAi held

                                       2
<PAGE>
them directly through wholly owned subsidiaries. As long as Mr. Diller, USAi's
Chairman and Chief Executive Officer, remains in such positions and does not
become disabled, these arrangements will remain in place. At such time as
Mr. Diller no longer occupies such positions, or if Mr. Diller becomes disabled,
Universal may have the right to designate a person to be the manager of USANi
LLC and the Chairman and Chief Executive Officer of USAi. If Universal does not
have such right, Liberty Media Corporation ("Liberty") may be entitled to
designate such persons. In all other cases, USAi is entitled to designate the
manager of USANi LLC.

STYLECLICK TRANSACTION

    On July 27, 2000, USAi and Styleclick.com Inc., an enabler of e-commerce for
manufacturers and retailers, completed the merger of USAi's Internet Shopping
Network ("ISN") and Styleclick.com Inc. The new company, which is named
Styleclick, Inc. ("Styleclick"), owns and operates the combined properties of
Styleclick.com Inc. and ISN. Styleclick's class A common shares are traded on
Nasdaq under the symbol "IBUY." As of December 31, 2000, USAi beneficially owned
100% of the outstanding Styleclick Class B common stock, representing 74.29% of
the total common stock of Styleclick and 96.65% of the total voting power of
Styleclick outstanding common stock.

CORPORATE STRUCTURE AND CONTROLLING SHAREHOLDERS

    As of January 31 2001, USAi owned 7.3% and indirectly through Holdco 36.2%
of the outstanding USANi LLC shares, Universal owned 48.6% of the outstanding
USANi LLC shares and Liberty owned 7.9% of the outstanding USANi LLC shares.

    Under an exchange agreement, dated February 12, 1998, among USAi, Universal
and Liberty, Universal may exchange its USANi LLC shares for shares of USAi's
common stock and Class B common stock and Liberty may exchange its USANi LLC
shares for USAi's common stock. USAi has the right, subject to conditions, to
require Liberty to exchange such shares when, under applicable law, it is
legally permitted to do so. USAi may only require Universal to exchange its
USANi LLC shares upon a sale of USAi as provided in the exchange agreement.

FORWARD LOOKING STATEMENTS

    THIS REPORT CONTAINS "FORWARD-LOOKING STATEMENTS" WITHIN THE MEANING OF THE
SECURITIES LAWS. WE HAVE BASED THESE FORWARD-LOOKING STATEMENTS ON OUR CURRENT
EXPECTATIONS AND PROJECTIONS ABOUT FUTURE EVENTS, BASED ON THE INFORMATION
CURRENTLY AVAILABLE TO US. SUCH FORWARD-LOOKING STATEMENTS ARE PRINCIPALLY
CONTAINED IN THE SECTIONS "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS" AND "BUSINESS." THE FORWARD-LOOKING
STATEMENTS INCLUDE, AMONG OTHER THINGS, STATEMENTS RELATING TO OUR ANTICIPATED
FINANCIAL PERFORMANCE, BUSINESS PROSPECTS, NEW DEVELOPMENTS, NEW MERCHANDISING
STRATEGIES AND SIMILAR MATTERS.

    THESE FORWARD-LOOKING STATEMENTS ARE SUBJECT TO RISKS, UNCERTAINTIES AND
ASSUMPTIONS, THAT MAY AFFECT THE OPERATIONS, PERFORMANCE, DEVELOPMENT AND
RESULTS OF OUR BUSINESS AND INCLUDE, BUT ARE NOT LIMITED TO, THE FOLLOWING:

    - MATERIAL ADVERSE CHANGES IN ECONOMIC CONDITIONS IN OUR MARKETS;

    - FUTURE REGULATORY ACTIONS AND CONDITIONS IN OUR OPERATING AREAS;

    - COMPETITION FROM OTHERS;

    - SUCCESSFUL INTEGRATION OF OUR DIVISIONS' MANAGEMENT STRUCTURES;

    - PRODUCT DEMAND AND MARKET ACCEPTANCE;

                                       3
<PAGE>
    - THE ABILITY TO PROTECT PROPRIETARY INFORMATION AND TECHNOLOGY OR TO OBTAIN
      NECESSARY LICENSES ON COMMERCIALLY REASONABLE TERMS; AND

    - OBTAINING AND RETAINING KEY EXECUTIVES AND EMPLOYEES.

WE UNDERTAKE NO OBLIGATION TO PUBLICLY UPDATE OR REVISE ANY FORWARD-LOOKING
STATEMENTS, WHETHER AS A RESULT OF NEW INFORMATION, FUTURE EVENTS OR ANY OTHER
REASON. IN LIGHT OF THESE RISKS, UNCERTAINTIES AND ASSUMPTIONS, THE
FORWARD-LOOKING EVENTS DISCUSSED IN THIS REPORT MAY NOT OCCUR.

                           DESCRIPTION OF BUSINESSES

CABLE AND STUDIOS

    USA CABLE

    USA Cable operates four domestic advertiser-supported 24-hour cable
television networks--USA Network, Sci Fi Channel, Trio and NewsWorld
International ("NWI"). Since its inception in 1977, USA Network has grown into
one of the nation's most widely distributed and viewed satellite-delivered
television networks. According to Nielsen Media Research, as of December 2000,
USA Network was available in approximately 79.9 million U.S. households (78% of
the total U.S. households with televisions). For the 2000 year, USA Network
earned the highest primetime rating of any domestic basic cable network, with an
average rating of 2.1 in primetime for the 12-month period (Source: Nielsen
Media Research). USA Network is a general entertainment network featuring
original series and movies, theatrical movies, off-network television series and
major sporting events, designed to appeal to the available audiences during
particular viewing hours. In general, USA Network's programming is targeted at
viewers between the ages of 25 to 54.

    Sci Fi Channel was launched in 1992. It has been one of the fastest-growing
satellite-delivered networks since its inception. According to Nielsen Media
Research, as of December 2000, Sci Fi Channel was available in 66.7 million U.S.
households (65% of the total U.S. households with televisions). Sci Fi Channel
features science fiction, horror, fantasy and science-fact oriented programming.
In general, Sci Fi Channel's programming is designed to appeal to viewers
between the ages of 25 to 54. According to Nielsen Media Research, Sci Fi
Channel averaged a primetime 0.9 rating for calendar year 2000, and a 1.1 rating
for December 2000, both new records for the network.

    In addition to the services described above, Sci Fi Channel has its own
website, SCIFI.COM, which was launched in 1995. SCIFI.COM is an online science
fiction resource, featuring original entertainment, daily news, feature stories,
games and special events that focus on science fiction, science fact, fantasy,
horror, the paranormal and the unknown.

    Trio and NWI were acquired by USA Cable from the Canadian Broadcasting
Corporation ("CBC") and Power Broadcasting Inc. in May 2000. Trio is a general
entertainment network that features programming primarily from Canada, Great
Britain and Australia. NWI is a 24-hour international news channel that presents
hourly newscasts, and other long-form contemporary magazine shows. As of
December 31, 2000, Trio and NWI were each available in less than 10 million U.S.
households.

    USA Cable's four networks derive virtually all of their revenues from two
sources. The first is the per-subscriber fees paid by the cable operators and
other distributors. The second is from the sale of advertising time within the
programming carried on each of the networks.

    In March 2001, USA Cable announced that it will establish a new digital
channel called Crime, to launch Fall 2001, co-founded by COPS creator John
Langely. The Crime channel will feature reality programming, police dramas and
hit crime films. In addition, the Company acquired Crime.com, a popular Internet
destination for information, public safety news and entertainment, all relating
to crime, to serve as the interactive companion of the new channel.

                                       4
<PAGE>
    PROGRAMMING AND TRANSMISSION.  Presently, USA Network's program line-up
features original series, produced exclusively for USA Network, including LA
FEMME NIKITA, COVER ME, and THE HUNTRESS. USA Network also exhibits
approximately 18 movies produced exclusively for it each year. USA Network's
programming includes off-network series such as JAG, NASH BRIDGES, and WALKER,
TEXAS RANGER and major theatrically-released feature films. USA Network is home
to the ECO-CHALLENGE, exclusive midweek coverage of the U.S. OPEN TENNIS
CHAMPIONSHIPS and early round coverage of THE MASTERS, the RYDER CUP and major
PGA Tour golf events.

    USA Network typically enters into long-term agreements for its major
off-network series programming. Its original series commitments usually start
with less than a full year's commitment (generally, a pilot episode), but
contain options for further production over several years. In addition, USA
Network has some original programming produced for it (through
financing/distribution arrangements entered into by its wholly owned subsidiary,
USA Cable Entertainment LLC), so that it is better able to control all of the
rights to such programming. These original productions will include specials,
series, and made-for-television movies. USA Network acquires theatrical films in
both their "network" windows and "pre-syndication" windows. Under these
arrangements, the acquisition of such rights is often concluded many years
before the actual exhibition of the films begins on the network. USA Network's
original films start production less than a year prior to their initial
exhibition. USA Network typically obtains the right to exhibit both its acquired
theatrical films and original films numerous times over multiple year periods.

    Sci Fi Channel's program lineup includes original programs produced
specifically for it, such as FARSCAPE, FIRST WAVE, INVISIBLE MAN, and CROSSING
OVER WITH JOHN EDWARD, as well as science fiction movies and classic science
fiction series, such as the original STAR TREK, THE TWILIGHT ZONE, and QUANTUM
LEAP. Sci Fi Channel's programming arrangements for off-network series, original
series, theatrical movies and original movies are similar to those entered into
by USA Network.

    Trio's program lineup consists of drama series, documentary series, and
films generally licensed from distributors in Canada, Australia and Great
Britain. Programs include the British series CRACKER, Canada's TRADERS, and the
Australian medical drama ADRENALIN JUNKIES.

    NWI's line-up consists of updated newscasts at the top of each hour entitled
INTERNATIONAL NEWSFIRST which covers the top global news as well as
international news items on business, sports, weather and entertainment.
Throughout the day NWI also features daily world newscasts presently licensed
from broadcasters in Mexico, Russia, China, Germany, Japan and Canada, which are
presented both in the original language and with an English translation. Under a
long-term supply agreement, NWI's programming is produced by CBC, in Canada.

    USA Cable's four networks distribute their programming service on a 24-hour
per day, seven day per week basis. All four networks are distributed in all 50
states and Puerto Rico via satellite for distribution by cable television
systems and direct broadcast satellite systems and for satellite antenna owners
by means of satellite transponders owned or leased by USA Cable. Any cable
television system or individual satellite dish owner in the United States and
its territories and possessions equipped with standard satellite receiving
facilities is capable of receiving USA Cable's services.

    USA Cable has the full-time use of four transponders on two domestic
communications satellites. USA Cable has protection in the event of the failure
of its transponders. When the carrier provides services to a customer on a
"protected" basis, replacement transponders (I.E., spare or unassigned
transponders) on the satellite may be used in the event the "protected"
transponder fails. Should there be no replacement transponders available, the
"protected" customer will displace a "preemptible" transponder customer on the
same satellite. The carrier also maintains a protection satellite and should a
satellite fail completely, all "protected" transponders would be moved to the
protection satellite which is available on a "first fail, first served" basis.

                                       5
<PAGE>
    A transponder failure that would necessitate a move to another transponder
on the same satellite would not result in any significant interruption of
service to those that receive USA Cable's programs. However, a failure that
would necessitate a move to another satellite temporarily may affect the number
of cable systems that receive USA Cable programs as well as other programming
carried on the failed satellite, because of the need to install equipment or to
reorient earth stations. The projected ends of life of the two satellites
utilized by USA Cable are April 2005 and June 2006, respectively.

    USA Cable's control of two different transponders on each of two different
satellites would enable it to continue transmission of USA Network and Sci Fi
Channel should either one of the satellites fail. USA Cable does not have this
capability for Trio and NWI. Although USA Cable believes it is taking reasonable
measures to ensure its continued satellite transmission capability, there can be
no assurance that termination or interruption of satellite transmission will not
occur. Such a termination or interruption of service by one or both of these
satellites could have a material adverse effect on the operations and financial
condition of USANi LLC. The availability of replacement satellites and
transponders beyond current leases is dependent on a number of factors over
which USA Cable has no control, including competition among prospective users
for available transponders and the availability of satellite launching
facilities for replacement satellites.

    Each of the networks enters into agreements with cable operators and other
distributors which agree to carry the programming service, generally as part of
a package with other advertiser-supported programming services. These agreements
are multi-year arrangements, and obligate the distributor to pay USA Cable a fee
for each subscriber to the particular programming service. From time to time, a
USA Cable network will be distributed on one or more cable systems without a
distribution agreement in effect while the parties negotiate a new agreement, a
process that may be protracted. While the cessation of carriage by a major cable
operator would have a negative impact on the financial results of USA Cable, the
Company has successfully managed the distribution agreement process in the past,
and believes it will continue to do so.

    STUDIOS USA

    Studios USA produces and distributes television programs intended for
initial exhibition on television and home video in both domestic and
international markets. These productions include original programming for
network television and first-run syndication through local television stations.
Studios USA also is the exclusive domestic distributor of the Universal
television library. In addition to the activities of Studios USA, other USAi
business units are also engaged in financing and distributing television
programs for exhibition on USA Network and Sci Fi Channel.

    Studios USA and its predecessor companies have produced programming for
network television since the early 1950s and Studios USA remains a major
supplier of network and first-run syndication programming today, including
LAW & ORDER, LAW & ORDER: SPECIAL VICTIMS UNIT, SALLY (hosted by Sally Jesse
Raphael), THE JERRY SPRINGER SHOW and MAURY (hosted by Maury Povich). For the
2000/01 broadcast season, Studios USA launched two new series for CBS, WELCOME
TO NEW YORK and THE DISTRICT, two new series for NBC entitled DEADLINE and FIRST
YEARS. Production of IN SEARCH OF, a new series for the Fox Broadcasting Company
("FBC"), has commenced. For the upcoming 2001/02 broadcast season, Studios USA
has received orders from NBC for two new series from LAW & ORDER creator, Dick
Wolf, entitled LAW & ORDER: CRIMINAL INTENT and TRIAL & ERROR. Studios USA has
also launched a new syndicated series, ARREST & TRIAL. Studios USA generally
retains foreign and off-network distribution rights for programming originally
produced for television networks or first-run syndication.

    Television production generally includes four steps: development,
pre-production, principal photography and post-production. The
production/distribution cycle represents the period of time from development of
the property through distribution and varies depending upon such factors as type
of product and primary form of exhibition. Under the facilities lease agreement,
Studios USA's Southern

                                       6
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California production activities are centered on the Universal production lot.
Some television programs and films are produced, in whole or in part, at other
locations both inside and outside the United States.

    Development of television programs and films begins with ideas and concepts
of producers and writers, which form the basis of a television series or film.
Producers and writers are frequently signed to term agreements generally
providing Studios USA with exclusive use of their services for a term ranging
from one to five years in the case of producers and one to two years in the case
of writers. Term agreements are signed with such talent to develop network
comedy and drama and first-run syndication programming. Term agreements are also
signed with actors, binding them to Studios USA for a period of time during
which Studios USA attempts to attach them to a series under development. These
term agreements represent a significant investment for Studios USA.

    In the case of network development, the ideas and concepts developed by
producers and writers are presented to broadcast networks to receive their
approval and financial participation in the development of a "pilot" that could
possibly become a commitment from the network to license a minimum number of
episodes based on the pilot. In general, the production cycle for network
programming begins with the presentation of pilot concepts to network
broadcasters in the fall of each year. Alternatively, Studios USA may elect to
self-finance a project, and then market the completed script or produced pilot
to the various networks. In any case, each May, networks release their fall
schedules, committing to the series production of pilots, renewing existing
programs and canceling others. Networks typically commit to seven to thirteen
episodes for such new series with options to acquire additional episodes for a
negotiated license fee and twenty-two episodes for a renewed series. Production
on these series begins in June and continues through March, depending upon the
network commitment. The network broadcast season runs from September through
May. Studios USA incurs production costs throughout the production cycle up
through completion of an episode while networks remit a portion of the license
fees to Studios USA upon the beginning of episodic production and a portion upon
delivery of episodes.

    Several of Studios USA's subsidiary companies are individually and
separately engaged in the development and/or production of television programs.
Certain of these subsidiaries are also signatories to various collective
bargaining agreements within the entertainment industry. The most significant of
these are the agreements with the Writers Guild of America ("WGA"), the
Directors Guild of America ("DGA") and the Screen Actors Guild ("SAG") which
agreements typically have a term of several years and then require
re-negotiation. The current WGA agreement expires on May 1, 2001 and the SAG
agreement expires on June 30, 2001. On January 22, 2001, the WGA began
negotiations with the Alliance of Motion Picture and Television Producers
(AMPTP), which represents studios, major production companies and networks.
Although USAi's subsidiaries, including subsidiaries of Studios USA, have taken
appropriate measures to prepare for a strike by the WGA and/or SAG and minimize
any impact, a prolonged work stoppage would reduce the number of programs that
could be produced.

    TELEVISION PRODUCTION CUSTOMERS.  Studios USA produces television programs
for the U.S. broadcast networks for prime time television exhibition. Certain
television programs are initially licensed for network television exhibition in
the U.S. and are simultaneously syndicated outside the U.S. Historically,
Studios USA customers for network television product have been concentrated with
the three oldest major U.S. television networks--ABC, CBS and NBC. In recent
years, FBC, UPN and the WB Network have created new networks, decreasing to some
extent Studios USA's dependence on ABC, CBS and NBC and expanding the outlets
for its network product. Revenue from licensing agreements is recognized in the
period that the films are first available for telecast. Programming consists of
various weekly series, including the returning productions LAW & ORDER, LAW &
ORDER: SPECIAL VICTIMS UNIT and five new series WELCOME TO NEW YORK and THE
DISTRICT on CBS, DEADLINE and FIRST YEARS on NBC, and IN SEARCH OF on FBC. In
addition, Studios USA has already received orders from NBC for two new series
from LAW & ORDER creator, Dick Wolf, entitled LAW & ORDER: CRIMINAL

                                       7
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INTENT and TRIAL & ERROR. In the initial telecast season, the network license
provides for the production of a minimum number of episodes, with the network
having the option to order additional episodes for both the current and future
television seasons. The success of any one series may be influenced by the time
period in which the network airs the series, the strength of the programs
against which it competes, promotion of the series by the network and the
overall commitment of the network to the series.

    Generally, network licenses give the networks the exclusive right to
telecast new episodes of a given series for a period of time, generally four to
five years and sometimes with further options thereafter. Recently, series
produced by Studios USA have been distributed on a "dual platform" basis. In the
case of LAW & ORDER: SPECIAL VICTIMS UNIT, for example, the USA Network shares
the initial exhibition "window" with NBC. The same "dual platform" distribution
will be used for LAW & ORDER: CRIMINAL INTENT, starting in the fall of 2001.
Likewise, in the case of IN SEARCH OF, the USA Network will share the initial
exhibition window with FBC.

    Studios USA also produces television film product that is initially
syndicated directly to independent television stations for airing throughout the
broadcast day and to network affiliated stations for non-primetime airing.
First-run syndication programming for 2000/01 includes three returning talk
shows, SALLY, THE JERRY SPRINGER SHOW, and MAURY. In addition, in the fall of
2000, Studios USA launched a half-hour reality strip from LAW & ORDER creator
Dick Wolf entitled ARREST & TRIAL.

    Studios USA has also been distributing programs on a "dual platform" basis
in cable and syndication. For example, INVISIBLE MAN currently is distributed on
a dual platform basis on the Sci Fi Channel and in first-run syndication, and
commencing with the 2001-02 broadcast season, Sci Fi's CROSSING OVER WITH JOHN
EDWARD also will be dual platformed on Sci Fi Channel and in first-run
syndication. In addition, Studios USA has licensed off-syndication episodes of
syndicated programs to cable channels, including HERCULES: THE LEGENDARY
JOURNEYS to USA Network and XENA: WARRIOR PRINCESS to Oxygen.

    Studios USA licenses television film product to independent stations and
directly to network affiliated stations in return for either a cash license fee,
barter or part-barter and part-cash. Barter syndication is the process whereby
Studios USA obtains commitments from television stations to broadcast a program
in certain agreed upon time periods. Studios USA retains advertising time in the
program in lieu of receiving a cash license fee, and sells such retained
advertising time for its own account to national advertisers at rates based on
the projected number of viewers. By placing the program with television stations
throughout the United States, an "ad hoc" network of stations is created to
carry the program. The creation of this ad hoc network of stations, typically
representing a penetration of at least 80% of total U.S. television households,
enables Studios USA to sell the commercial advertising time through advertising
agencies for sponsors desiring national coverage. The rates charged for this
advertising time are typically lower than rates charged by U.S. broadcast
networks for similar demographics since the networks coverage of the markets is
generally greater. In order to create this ad hoc network of stations and reach
80% of total U.S. television households, Studios USA must syndicate its
programming with stations that are owned and operated by the major broadcast
networks and station groups, which are essentially entities which own many
stations in the major broadcast markets across the United States. Without
commitments from broadcast network stations and station groups, the necessary
market penetration may not be achieved which may adversely affect the chances of
success in the first-run syndication market.

    Generally, television films produced for broadcast networks or barter
syndication (or those financed by USA Cable Entertainment LLC for cable
exhibition) provide license fees and/or advertising revenues that cover only a
portion of the anticipated production costs. The recoverability of the balance
of the production costs and the realization of profits, if any, is dependent
upon the success of other exploitation including international syndication
licenses, subsequent basic cable and domestic syndication licenses, releases in
the home video market, merchandising and other uses. Pursuant to an agreement
with Universal, Studios USA has the right to include eligible product in
Universal's international free television output and volume agreements with
television broadcasters in major international territories. These agreements
represent a substantial revenue source for Studios USA.

                                       8
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    DISTRIBUTION.  In general, during the initial production years of a
primetime series for the broadcast networks (I.E., seasons one to four),
domestic network and international revenues fall short of production costs. As a
result, the series will likely remain in a deficit position until sold in the
domestic syndication market. The series will be available for airing in the
off-network syndication market after a network's exclusivity period ends,
typically the September following the completion of the third or fourth network
season (or the subsequent season if the series were a mid-season order). For a
successful series, the syndication sales process generally begins during the
second or third network season. The price that a series will command in
syndication is a function of supply and demand. Studios USA syndicated series
are sold for cash and/or bartered services (I.E., advertising time), typically
for a period of at least five years. Barter transactions have played an
increasingly important role in the syndication process as they can represent a
majority of the distributor's syndication revenue.

    Studios USA distributes its current programming domestically. In addition,
USAi and Universal have agreed that Studios USA will have the exclusive right
through February 2013 to distribute domestically Universal's large television
library, with programming dating back to the 1950s and including such series as
ALFRED HITCHCOCK PRESENTS; THE VIRGINIAN; MARCUS WELBY, M.D.; DRAGNET; COLUMBO;
KOJAK; THE ROCKFORD FILES; MURDER SHE WROTE; MAGNUM P.I.; MIAMI VICE; COACH; and
NORTHERN EXPOSURE. During this period, Studios USA also has the exclusive right,
with limited exceptions, to distribute domestically television programming newly
produced by Universal.

    In addition, USAi and Universal have agreed that Universal will have the
exclusive right, again with limited exceptions, to distribute all Studios USA
programming internationally. In that regard, Universal has entered into several
output and volume agreements with international television broadcasters that
include programming produced by Studios USA, including agreements in Germany,
France, Spain, Italy and the United Kingdom. These agreements generally provide
that the licensor in a given territory shall have exclusive first-run free
television rights to all Universal or Studios USA product, or alternatively,
provide mechanisms by which the licensor generally commits to license a minimum
number per year of first-run series and first-run television movies during a
specified term in the territory. Pursuant to the terms of the international
distribution agreement between USAi and Universal, USAi's eligible programming
will have the first right to participate in Universal's international output and
volume agreements with international television broadcasters.

ELECTRONIC RETAILING

HOME SHOPPING NETWORK

    Home Shopping Network sells a variety of consumer goods and services by
means of live, customer-interactive electronic retail sales programs which are
transmitted via satellite to cable television systems, affiliated broadcast
television stations and satellite dish receivers. Home Shopping Network operates
three retail sales programs in the United States, each 24 hours a day, seven
days a week: HSN and America's Store, in English; and HSE (Home Shopping en
Espanol), in Spanish.

    Home Shopping Network's retail sales and programming are intended to promote
sales and customer loyalty through a combination of product quality, price and
value, coupled with product information and entertainment. HSN and America's
Store programs are carried by cable television systems and broadcast television
stations throughout the country. HSE is carried primarily in markets with
significant Spanish speaking populations. All three programs are divided into
segments which are televised with a host who presents the merchandise, sometimes
with the assistance of a guest representing the product vendor, and conveys
information relating to the product. Viewers purchase products by calling a
toll-free telephone number. According to Nielsen Media Research, as of
December 31, 2000, HSN was available in approximately 76.7 million unduplicated
households, including approximately 65.6 million cable households.

                                       9
<PAGE>
    The following table highlights the changes in the estimated unduplicated
television household reach of HSN, by category of access for the year ended
December 31, 2000:

<TABLE>
<CAPTION>
                                                       CABLE(1)(2)   BROADCAST(1)(3)    OTHER      TOTAL
                                                       -----------   ---------------   --------   --------
                                                                  (IN THOUSANDS OF HOUSEHOLDS)
<S>                                                    <C>           <C>               <C>        <C>
Households--December 31, 1999........................     60,618         11,448         1,675      73,741
Net additions/(deletions)............................      4,962         (1,588)         (380)      2,994
                                                          ------                                   ------
Households--December 31, 2000........................     65,580          9,860         1,295      76,735
</TABLE>

------------------------

(1) Households capable of receiving both broadcast and cable transmissions are
    included under cable and therefore are excluded from broadcast to present
    unduplicated household reach.

(2) Cable households included 11.6 million and 9.1 million direct broadcast
    satellite households at December 31, 2000 and 1999, respectively, and
    therefore are excluded from other.

(3) See "Broadcast Television Distribution" below for a discussion of the
    disaffiliation of certain stations from HSN over the next year.

    According to industry sources, as of December 31, 2000, there were
102.2 million homes in the United States with a television set, 69.5 million
basic cable television subscribers and 1.3 million homes with satellite dish
receivers, excluding direct broadcast satellite.

    As of December 31, 2000, America's Store reached approximately 7.1 million
cable television households, of which 1.2 million were on a part time basis. Of
the total cable television households receiving America's Store, 6.8 million
also receive HSN.

    As of December 31, 2000, HSE reached approximately 2.5 million Hispanic
broadcast television households. During 2000, HSE also reached approximately
3 million cable television households on a full or part time basis pursuant to a
carriage arrangement on Univision's cable affiliate, Galavision, which
arrangement expired on December 31, 2000. For more information, see
"--International Home Shopping Network Ventures--SPANISH LANGUAGE NETWORKS."

CUSTOMER SERVICE AND RETURN POLICY

    Home Shopping Network believes that satisfied customers will be loyal and
will purchase merchandise on a regular basis. Accordingly, Home Shopping Network
has customer service personnel and computerized voice response units available
to handle calls relating to customer inquiries 24 hours a day, seven days a
week. Generally, any item purchased from Home Shopping Network may be returned
within 30 days for a full refund of the purchase price, including the original
shipping and handling charges.

DISTRIBUTION, DATA PROCESSING AND TELECOMMUNICATIONS

    Home Shopping Network's fulfillment subsidiaries store, service and ship
merchandise from warehouses located in Salem, Virginia and Waterloo, Iowa. Home
Shopping Network expects to open an additional fulfillment facility in Fontana,
California in 2001. Generally, merchandise is delivered to customers within
seven to ten business days of the receipt by Home Shopping Network of the
customer's payment for an order.

    Home Shopping Network currently operates multiple main frame and distributed
computing platforms and has extensive computer systems which track purchase
orders, inventory, sales, payments, credit authorization, and delivery of
merchandise to customers. During 2000, Home Shopping Network continued to make
significant progress upgrading many of its computer systems. These upgrades will
continue in 2001 through enhancements to existing systems and roll out of
additional key operational systems.

                                       10
<PAGE>
    Home Shopping Network has digital telephone and switching systems and
utilizes a voice response unit, which allows callers to place their orders by
means of touch-tone input or to be transferred to an operator.

PRODUCT PURCHASING AND LIQUIDATION

    Home Shopping Network purchases merchandise made to its specifications,
merchandise from manufacturers' lines, merchandise offered under certain
exclusive rights and overstock inventories of wholesalers. The mix of products
and source of such merchandise depends upon a variety of factors including price
and availability. Home Shopping Network generally does not have long-term
commitments with its vendors, and there are various sources of supply available
for each category of merchandise sold.

    Home Shopping Network's product offerings include: hardgoods, which include
consumer electronics, collectibles, housewares, consumables, entertainment,
sports and fitness; jewelry; fashion, which includes fashion and accessories;
and cosmetics, which consists primarily of cosmetics, skin care and nutritional
supplements. For 2000 hardgoods, jewelry, fashion and cosmetics accounted for
approximately 50.4%, 26.0%, 13.4% and 10.2%, respectively, of Home Shopping
Network's net sales.

    Home Shopping Network liquidates excess inventory through its four outlet
stores located in the Tampa Bay and Orlando areas and one outlet store in the
Chicago area. Damaged merchandise is liquidated by Home Shopping Network through
traditional channels.

TRANSMISSION AND PROGRAMMING

    Home Shopping Network produces its programming in its studios located in St.
Petersburg, Florida. HSN, America's Store and HSE programs are distributed to
cable television systems, broadcast television stations, direct broadcast
satellite, and/or satellite antenna owners by means of Home Shopping Network's
satellite uplink facilities to satellite transponders leased by Home Shopping
Network. Any cable television system, broadcast television station or individual
satellite dish owner in the United States and the Caribbean Islands equipped
with standard satellite receiving facilities and the appropriate equipment is
capable of receiving HSN, America's Store and HSE.

    Home Shopping Network has lease agreements securing full-time use of two
transponders on two domestic communications satellites. Each of the transponder
lease agreements grants Home Shopping Network "protected" rights. When the
carrier provides services to a customer on a "protected" basis, replacement
transponders (I.E., spare or unassigned transponders) on the satellite may be
used in the event the "protected" transponder fails. Should there be no
replacement transponders available, the "protected" customer will displace a
"preemptible" transponder customer on the same satellite. The carrier also
maintains a protection satellite and should a satellite fail completely, all
"protected" transponders would be moved to the protection satellite which is
available on a "first fail, first served" basis.

    During 2000, Home Shopping Network also had a lease agreement for a third
transponder on a domestic communications satellite which lease had been
subleased by Home Shopping Network in 1996 to a third party cable programming
service. The monthly sublease rental was in excess of the monthly lease payment.
In November 2000, the lease was assigned and assumed by the third party cable
programming service. The foregoing assignment and assumption was made with the
written consent of the lessor who released Home Shopping Network from any and
all liabilities arising under the lease from and after the assignment date.

    A transponder failure that would necessitate a move to another transponder
on the same satellite would not result in any significant interruption of
service to the cable systems and/or television stations which receive HSN,
America's Store or HSE. However, a failure that would necessitate a move to

                                       11
<PAGE>
another satellite may temporarily affect the number of cable systems and/or
television stations which receive HSN, America's Store or HSE, as well as all
other programming carried on the failed satellite, because of the need to
install equipment or to reorient earth stations.

    The terms of two of the satellite transponder leases utilized by Home
Shopping Network are for the life of the satellites, which are projected through
2004 for the satellite presently carrying HSN and through 2005 for the satellite
carrying America's Store and HSE.

    Home Shopping Network's access to two transponders pursuant to long-term
agreements would enable it to continue transmission of Home Shopping Network
programming should either one of the satellites fail. Although Home Shopping
Network believes it is taking every reasonable measure to ensure its continued
satellite transmission capability, there can be no assurance that termination or
interruption of satellite transmissions will not occur. Such a termination or
interruption of service by one or both of these satellites could have a material
adverse effect on the operations and financial condition of USAi.

    The availability of replacement satellites and transponder time beyond
current leases is dependent on a number of factors over which Home Shopping
Network has no control, including competition among prospective users for
available transponders and the availability of satellite launching facilities
for replacement satellites.

    The FCC grants licenses to construct and operate satellite uplink facilities
which transmit signals to satellites. These licenses are generally issued
without a hearing if suitable frequencies are available. Home Shopping Network
has been granted one license for operation of C-band satellite transmission
facilities and one license for operation of KU-band satellite transmission
facilities on a permanent basis in Clearwater and St. Petersburg, Florida.

CABLE TELEVISION DISTRIBUTION

    Home Shopping Network has entered into affiliation agreements with cable
system operators to carry HSN, America's Store, HSE, and/or a combination of the
services. These agreements are multi-year arrangements, and obligate the cable
operator to assist with the promotional efforts of Home Shopping Network by
carrying commercials promoting HSN, America's Store and HSE and by distributing
Home Shopping Network's marketing materials to the cable operator's subscribers.
All cable operators receive significant compensation for carriage, including a
commission based on a percentage of the net merchandise sales within the cable
operator's franchise area and, generally, additional compensation consisting of
the purchase of advertising availabilities from cable operators on other
programming networks, commission guarantees for the operator, or upfront
payments to the operator in return for commitments to deliver a minimum number
of Home Shopping Network subscribers for a certain number of years. From time to
time, a cable network operated by HSN will be distributed on one or more cable
systems without a distribution agreement in effect while the parties negotiate a
new agreement, a process that may be protracted. While the cessation of carriage
by a major cable operator would have a negative impact on the financial results
of HSN, the Company has successfully managed the distribution agreement process
in the past, and believes it will continue to do so.

BROADCAST TELEVISION DISTRIBUTION

    Home Shopping Network has entered into affiliation agreements with
television stations to carry HSN, America's Store and HSE programs. In addition
to the 13 owned and operated full-power (three of which do not carry HSN,
America's Store or HSE on a full-time basis) and 26 low-power television
stations owned by USAi, as of December 31, 2000, USAi has affiliation agreements
with 4 full-time, full-power stations, 37 part-time, full-power stations that
carry HSN, America's Store or HSE and 74 low-power stations. USAi has a minority
ownership interest in 4 of the full-time, full-power stations,

                                       12
<PAGE>
three of which carry HSN. The affiliation agreements have terms ranging from
several weeks to several years. All television station affiliates other than
stations owned by USAi receive an hourly or monthly fixed rate for airing HSN,
America's Store or HSE programs. Full-power television signals are carried by
cable operators within a station's coverage area. For more information, see
"--Regulation--Must-Carry/Retransmission Consent." Low-power station signals are
rarely carried by cable systems.

    USAi has entered into an agreement to transfer the above referenced 13 owned
and operated full-power television stations to Univision. The agreement with
Univision permits the ten stations that are currently airing HSN to continue to
do so until January 10, 2002.

    Home Shopping Network expects that, before HSN is disaffiliated, it will
have entered into agreements with cable operators in the aforementioned markets
under which the cable operators will transition HSN from broadcast to satellite
feed upon disaffilation. Agreements with most cable operators have already been
reached, and Home Shopping Network expects that it will reach agreement with the
remaining operators and successfully manage the process of disaffiliation,
although there can be no assurance as to whether or when such agreements will be
reached, or their terms, which could have a negative impact on the financial
operations of Home Shopping Network. HSN customers in these markets who receive
HSN only through over-the-air broadcast television will not be able to receive
HSN unless they subscribe to a cable or satellite service that offers HSN. The
effect of this on HSN's financial results is currently being evaluated. A loss
in sales is expected, which would be partially offset by the elimination of the
costs of operating the television stations being sold. Based on preliminary
estimates, management believes that sales and EBITDA loss at HSN should be in
the range of approximately 6%, a loss that management believes to be
insignificant in relation to the proceeds associated with the Univision
transaction. There is no definitive way, however, to calculate in advance the
sales or EBITDA losses that will be associated with disaffiliation, and actual
sales and EBITDA losses could be higher.

DIRECT BROADCAST SATELLITE DISTRIBUTION

    Home Shopping Network has entered into affiliation agreements with the two
largest direct broadcast satellite operators to carry HSN. The agreements are
multi-year arrangements, and obligate the direct broadcast satellite operator to
deliver a minimum number of HSN subscribers throughout the term in consideration
for a distribution payment and a commission based on net merchandise sales to
such subscribers. The direct broadcast satellite operators are also obligated to
assist with the promotional efforts of Home Shopping Network by carrying
commercials promoting HSN and by distributing Home Shopping Network's marketing
materials to its subscribers.

INTERNATIONAL HOME SHOPPING NETWORK VENTURES

    EUROPE.  On December 17, 1999, USAi entered into an agreement with Thomas
and Leo Kirch and Georg Kofler pursuant to which each agreed to cooperate with
each other to pursue on an exclusive basis in Europe televised shopping and
related e-commerce opportunities and to consider pursuing other media
opportunities in each case subject to preexisting obligations and applicable law
and regulation in the various member countries. The parties agreed to consider
alternatives consistent with applicable law with respect to the structure of any
entities formed to pursue such opportunities. To date, the parties have been
using HOT Networks AG, a German stock corporation owned 46.67% by Home Shopping
Network ("HOT Networks"), and its affiliates in pursuing these objectives.

    BELGIUM/FRANCE.  HOT Networks has also begun a French-language televised
shopping business called "HOT Le Grand Magasin" from a facility in Brussels,
Belgium and which is broadcast 24 hours a day in Belgium and France.

    GERMANY.  In 1999, the joint venture entity through which Home Shopping
Network participates in a German-language televised shopping business which
broadcasts 24 hours a day, H.O.T. Home Order

                                       13
<PAGE>
Television GmbH & Co. KG, was converted to a German AG ("HOT Germany"). Home
Shopping Network owns 41.9% of HOT Germany. In connection with such
restructuring, Home Shopping Network and Mr. Kofler entered into a shareholders
agreement which, among other things, provides that Mr. Kofler will vote his
shares in HOT Germany as directed by Home Shopping Network on certain matters
including the election of a majority of the members of the Supervisory Board of
HOT Germany. Mr. Kofler also granted Home Shopping Network a right of first
refusal with respect to the stock in HOT Germany held by him. Home Shopping
Network also agreed to purchase Mr. Kofler's HOT Germany stock under certain
circumstances and agreed to vote as directed by Mr. Kofler on various matters
including the election of Mr. Kofler as Chairman of the HOT Germany Supervisory
Board.

    ITALY.  In 1998, Home Shopping Network entered into a joint venture
agreement with SBS Broadcasting System S.A. and SBS Italia S.r.l. ("SBS Italia")
to explore and, if deemed feasible, develop an Italian language televised
shopping business. During 1999, Home Shopping Network, SBS and SBS Italia agreed
to restructure the joint venture and to change the name of SBS Italia to HOT
Italia and to utilize HOT Italia as the vehicle for developing a live shopping
business in Italy. As a result of the restructuring, 51% of the equity of HOT
Italia was transferred to H.O.T. Home Order Television Europe GmbH & Co. KG
("Hot Europe") and 12% transferred to HOT Germany. HOT Europe is a partnership
in which Home Shopping Network has a 19.2% non-voting equity interest and that
is controlled by H.O.T. Home Order Television International GmbH ("HOT
International"). HOT International is owned by Georg Kofler, Thomas Kirch and
Quelle AG. Home Shopping Network's direct ownership interest in HOT Italia was
reduced to 18.5% as a result of this restructuring. HOT Germany contributed its
interest in HOT Italia to HOT Europe and Quelle assigned its interest in HOT
Europe and HOT International to Mr. Kofler.

    As of December 31, 2000, HOT Italia owned 10.1% of the equity of an entity,
Vallau Italia Promomarket ("VIP"), that operates an Italian national broadcast
network. HOT Italia entered into agreements to purchase 40% additional equity in
VIP from an Italian company called Internova S.p.A. as well as another 24.95% of
VIP from an Italian company called Profit S.p.A. The purchases under these
agreements have been completed, bringing HOT Italia's ownership interest in VIP
up to 75.05%. VIP had applied for a license to operate a national broadcast
network in Italy that was denied by the Italian authorities in May 2000.
However, an appeal has been filed and the Italian court system issued a stay in
VIP's favor on the government's order until this case is litigated, thus
allowing VIP to continue operating as it currently is until a judgment is
reached by the Italian court system. There can still be no assurance that VIP
will be granted a license and that HOT Italia will be able to acquire the
remaining 89.9% equity of VIP. On December 1, 2000, HOT Italia began
broadcasting with 4 hours of live programming each day. In the event a national
broadcast license or authorization is not granted after the above-mentioned
litigation, HOT Italia would be required to seek further alternative means of
distributing its programming. Currently, there are limited available means of
distributing television programming on a nationwide basis and there can be no
assurance that alternative means of distribution can be secured.

    CHINA.  In June 2000, Home Shopping Network purchased a 21% stake in TVSN
(China) Holdings Ltd. and will also have the ability to purchase a larger stake
in that company over the next several years. TVSN, through its Chinese partners,
broadcasts a televised shopping business 18 hours a day in Mandarin Chinese from
facilities in Shanghai, People's Republic of China. TVSN currently reaches
approximately 19 million households in China.

    JAPAN.  In 1997, Home Shopping Network acquired a 30% interest in Jupiter
Shop Channel Co. Ltd., a venture based in Tokyo. Jupiter Shop Channel broadcasts
televised shopping 24 hours a day, of which 60 hours per week are devoted to
live shopping. Jupiter Shop Channel has reached agreements to be available in
approximately 3.37 million full-time equivalent households as of December 31,
1999. Liberty Media International, Inc., a subsidiary of Liberty, owns a 50%
interest in Jupiter Programming Co. Ltd. which is the 70% shareholder in the
venture.

                                       14
<PAGE>
    SPANISH LANGUAGE NETWORKS.  During 2000, Home Shopping Network continued to
operate HOME SHOPPING EN ESPANOL (which is also known as HOME SHOPPING ESPANOL)
and continues to seek to expand its distribution in the United States and
elsewhere in the Spanish speaking world. The Company has also agreed in
December 2000 to purchase three television stations in Puerto Rico that will
broadcast HOME SHOPPING ESPANOL's programming full-time, consistent with FCC
rules, as of February 1, 2001. The stations are WAVB-TV, San Juan, Puerto Rice,
WVEO-TV, Aguadilla, Puerto Rico, and WVOZ-TV, Ponce, Puerto Rico. The
transaction is subject to regulatory approval and customary closing conditions,
and is expected to close in 2001. Additionally, as of July 2000, HOME SHOPPING
ESPANOL began airing 24 hours a day, seven days a week with twelve hours live
and twelve hours taped per day.

HSN INTERACTIVE

HSN.COM

    Home Shopping Network operates HSN.com as a transactional e-commerce site.
Home Shopping Network's site allows consumers to shop for selected merchandise
from Home Shopping Network's inventory, and provides opportunities for consumers
to engage in a variety of entertaining community activities including live chats
with celebrity guests and user populated bulletin boards. In 2000, Home Shopping
Network reorganized its growing website operation as part of HSN Interactive,
along with its Direct Selling Program and transactional television business.

DIRECT SELLING PROGRAMS

    During 2000, Home Shopping Network launched a new business to create and
distribute taped, direct response television programs ("Direct Selling Programs"
or "DSPs") and to develop and exploit other transactional opportunities on
television. These businesses were organized as part of HSN Interactive, along
with HSN.com.

USA ELECTRONIC COMMERCE SOLUTIONS

    USA Electronic Commerce Solutions (formerly USA Electronic Commerce and
Services) was formed in October 1999. ECS offers third parties an opportunity to
access more than 20 years of experience in electronic retailing and media within
USAi to engage in direct selling and to enhance their direct marketing
capabilities. ECS packages scalable solutions in areas of merchandising,
database marketing, teleservicing, online customer care and fulfillment. ECS's
services are supported by the media and commerce assets of USAi, including call
center and customer relationship management services from Precision Response
Corporation, warehousing and fulfillment systems of Home Shopping Network,
transaction enabling technology of Styleclick, and promotion inventory of the
USA Cable channels and Ticketmaster websites.

    ECS operates its business in the areas of Online Ventures, ECS Direct and
Short Shopping. Through Online Ventures, ECS operates and manages online stores
by partnering with third parties with strong brands that are committed to using
the Internet as a means of providing content and information to further enhance
these brands. Within the context of these brand extensions, ECS creates direct
selling experiences online by operating and managing the direct spelling
environment and infrastructure. ECS' services within the Online Ventures area
include fulfillment, customer service and customer care, website e-commerce
enablement, merchandising and Short Shopping. In addition, through Online
Ventures, ECS provides integrated marketing solutions to its online venture
partners, as well as to the sponsors and marketing partners of its venture
partners.

    ECS Direct provides clients with telemarketing services, email campaigns and
other direct selling opportunities in support of sale initiatives, merchandising
opportunities and partnership marketing programs. Short Shopping is USAi's
contextual commerce business that offers clients a means of

                                       15
<PAGE>
marketing, selling and delivering products to targeted television viewers
through direct selling commercials and through direct selling initiatives
embedded in traditional programming.

    In February 2000, ECS announced its first broad partnership with The
National Basketball Association (the "NBA"), pursuant to which ECS provides
integrated media marketing services, database-driven offers, catalogs and
promotion, in addition to fulfillment, customer service and merchandising
services for NBA.com. ECS also produces Short Shopping spots for the NBA. In
January 2001, ECS announced an agreement with Turner Sports Interactive, a
division of AOL Time Warner, pursuant to which ECS obtained the exclusive rights
to operate the online store on NASCAR.com. Also in January 2001, ECS announced
an agreement with SportsLine, Inc., under which ECS obtained the exclusive
rights to operate the online stores of CBS SportsLine.com and mvp.com. And in
February 2001, ECS announced a broad partnership with the PGA Tour, pursuant to
which ECS obtained the exclusive rights to operate the online store for all PGA
Tour-branded websites, as well as the exclusive rights to provide integrated
media marketing services, produce Short Shopping Spots, and leverage the online
store database to develop marketing programs for the Tour's marketing partners
and sponsors.

STYLECLICK

    STYLECLICK SERVICE FOR BUSINESS CUSTOMERS.  Styleclick provides customized
"end-to-end" e-commerce and merchandising solutions to companies in search of
effective and profitable online strategies. Styleclick offers such business
clients a range of services and products, including website design and
development; product imaging and presentation; merchandising; online sales,
visualization and merchandising technologies; and back-end integration. In
connection with Styleclick's operation of most of these websites, Styleclick
provides customer service and fulfillment through contractors including
affiliates of USAi. These websites are hosted on servers owned by Styleclick and
rely on a combination of third party and Styleclick proprietary technology to
operate. Styleclick generates revenue from clients of its customized
"end-to-end" e-commerce solutions via service fees charged for such design,
construction, operations and maintenance services, as well as service fees
charged for processing the sites' e-commerce transactions.

    Styleclick anticipates that ECS will be Styleclick's largest customer during
2001 as a result of ECS's engaging Styleclick to build the online store for
NASCAR, the PGA Tour and CBS/Sportsline as a part of the overall services
offered by ECS. In addition, Styleclick and ECS intend to seek opportunities to
expand Styleclick's role as a vendor of ECS. To the extent such opportunities
arise, Styleclick may become increasingly dependent upon ECS's ability to sell
services, including the services provided by Styleclick, to its existing and
future customers. ECS is under no obligation to use Styleclick's services and
there is no assurance that ECS will continue to use Styleclick's services, or to
use such services at the level anticipated by Styleclick. ECS's inability to
achieve anticipated sales levels, or its decision not to utilize the services of
Styleclick, could have a material adverse effect on Styleclick's business,
financial condition and results of operations.

    Styleclick has faced certain challenges in meeting its obligations to its
customers in a timely manner as a result of technology and other issues.
Styleclick management believes that with the technology platform acquired in
March 2001 from MVP.com, together with the employees hired in connection
therewith, Styleclick will be able to adequately address those challenges in the
near future. However, there can be no assurance that the technology platform
acquired from MVP.com will successfully address such problems, in which case
Styleclick faces the risk of losing existing customers, adversely affecting
Styleclick's results of operations and making it more difficult to attract new
customers.

    Styleclick and USAi are considering arrangements whereby USAi or its
affiliates would provide certain administrative and operational services to
Styleclick. Styleclick expects that these arrangements,

                                       16
<PAGE>
if adopted, would reduce Styleclick's expenses and may improve the likelihood
that ECS would supply business opportunities to Styleclick. There can be no
assurance that such arrangements will be put in place, what the terms of such
arrangements would be or whether such arrangements would, in fact, result in
increased business opportunities for Styleclick.

    STYLECLICK SERVICE FOR CONSUMERS.  Styleclick designs, builds and operates
for itself e-commerce websites, some of which operate under trademarks that it
owns and some of which operate under licensed trademarks. Styleclick's revenue
sources for all of these sites include sales to consumers, including shipping
and handling charges, and often include service fees charged for design,
construction, operations and maintenance services. Although Styleclick has
purchased inventory in the past, it has ceased doing so and intends to source
its product for these sites in the future through consignment and drop-ship
arrangements. Styleclick has substantially decreased emphasis on its consumer
services operating under Styleclick-owned brands, including decreasing marketing
cash expenditures and inventory expenditures.

    RECENT DEVELOPMENTS.  In March 2001, Styleclick announced a new company
organization designed to advance its offering of scalable commerce services. The
announcement included Styleclick's acquisition of the MVP.com technology
platform. Also in March 2001, the Styleclick Board elected two executives of ECS
to top management positions at Styleclick and certain senior executives of
Styleclick left the company.

    As a result of the current and anticipated operating losses of Styleclick
and the continuing evaluation of operations and technology, management recorded
a write-down of $145.6 million as goodwill amortization as of December 31, 2000.
Management is continuing to evaluate the operations of Styteclick, which could
result in additional write-downs and costs to further restructure the business
to improve results.

                                   REGULATION

CURRENT FCC REGULATION

    HSN programming is distributed throughout the country via full-power and
low-power broadcast television stations, cable television systems and direct
broadcast satellite systems. HSN has an affiliate relationship with most of the
television broadcast stations that distribute HSN programming. However, several
of these stations are owned by subsidiaries of USA Broadcasting, HSN's sister
corporation. Broadcasters, cable television system operators and direct
broadcast satellite operators are subject to substantial federal regulation,
particularly under the Communications Act of 1934, as amended, and the rules and
regulations promulgated thereunder by the FCC. Cable television systems are also
subject to regulation at the state and local levels. Because HSN relies on these
regulated entities for distribution of its programming, any changes in the
regulations summarized below may impact a substantial portion of HSN's business.

    The following is a brief summary of certain provisions of the Communications
Act (as amended) and specific FCC regulations and policies. Further information
concerning the nature and extent of federal regulation of broadcast stations is
found in the Communications Act, FCC rules and the public notices and rulings of
the FCC.

REGULATION OF CABLE SYSTEM OPERATORS AFFILIATED WITH VIDEO PROGRAMMING VENDORS

    The Cable Television Consumer Protection and Competition Act of 1992 (the
"1992 Act") prohibits a cable operator from engaging in unfair methods of
competition that prevent or significantly hinder competing multichannel video
programming distributors from providing satellite-delivered programming to their
subscribers. The FCC has adopted regulations to (1) prevent a cable operator
that has an attributable interest, including voting or non-voting stock
ownership of at least 5%, in a

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programming vendor from exercising improper influence over the programming
vendor in the latter's dealings with competitors to cable; and (2) to prevent a
programmer in which a cable operator has an attributable interest from
discriminating between cable operators and other multichannel video programming
distributors, including other cable operators.

    The FCC's rules may have the effect, in some cases, of requiring vertically
integrated programmers to offer their programming to multichannel video
programming distributor competitors of cable television, and of prohibiting
certain exclusive contracts between such programmers and cable system operators.
The rules also permit multichannel video programming distributors to bring
complaints before the FCC if they are unable to obtain cable programming on
non-discriminatory terms because of "unfair practices" by the programmer.

    Under the 1992 Act, the FCC set a 40% limit on the number of programming
channels on a cable system that may be occupied by video programmers in which
the cable operator has an attributable interest. The U.S. Court of Appeals for
the D.C. Circuit has overturned the 40% limit and remanded the issue to the FCC.

STATE AND LOCAL REGULATION

    Cable television systems are generally constructed and operated under
non-exclusive franchises granted by a municipality or other state or local
governmental entity. Franchises are granted for fixed terms and are subject to
periodic renewal. The Cable Communications Policy Act of 1984 places limitations
on the ability of a local franchising authority to control the operations of a
cable operator, and the courts from time to time have reviewed the
constitutionality of several franchise requirements, often with inconsistent
results. The 1992 Act prohibits exclusive franchises, and allows local
franchising authorities to exercise greater control over the operation of
franchised cable television systems, especially in the areas of customer service
and rate regulation. The 1992 Act also allows local franchising authorities to
operate their own multichannel video distribution systems without having to
obtain franchises. Moreover, local franchising authorities are immunized from
monetary damage awards arising from their regulation of cable television systems
or their decisions on franchise grants, renewals, transfers, and amendments.

    The terms and conditions of franchises vary materially from jurisdiction to
jurisdiction. Cable franchises generally contain provisions governing time
limitations on the beginning and completion of construction, and governing
conditions of service, including the number of channels, the types of
programming but not the actual cable programming channels to be carried, and the
provision of free service to schools and certain other public institutions. The
specific terms and conditions of a franchise and the laws and regulations under
which it is granted directly affect the profitability of the cable television
system, and thus the cable television system's financial ability to carry
programming. Local governmental authorities also may certify to regulate basic
cable rates. Local rate regulation for a particular system could result in
resistance on the part of the cable operator to the amount of subscriber fees
charged by USAi for its programming.

    Various proposals have been introduced at the state and local levels with
regard to the regulation of cable television systems, and a number of states
have enacted legislation subjecting cable television systems to the jurisdiction
of centralized state governmental agencies. USAi is not able to predict the
impact such regulation could have on its businesses.

OTHER CABLE REGULATION

    Cable television operators also are subject to regulations concerning the
commercial limits in children's programming and political advertising.

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BROADCAST TELEVISION LICENSE GRANT AND RENEWAL

    The Communications Act provides that a broadcast license, including the
licenses controlled by USA Broadcasting, may be granted to any applicant upon a
finding that the public interest, convenience and necessity would be served
thereby, subject to limitations. Television stations operate according to
broadcasting licenses that are usually granted by the FCC for a maximum
permitted term of eight years, subject to renewal upon application to the FCC.

ALIEN OWNERSHIP OF TELEVISION BROADCAST STATIONS

    The Communications Act prohibits the issuance of a broadcast license to, or
the holding of a broadcast license by, any corporation of which more than 20% of
the capital stock is beneficially or nominally owned or voted by non-U.S.
citizens or their representatives or by a foreign government or a representative
thereof, or by any corporation organized under the laws of a foreign country
(collectively, "Aliens"). The Communications Act also authorizes the FCC, if the
FCC determines that it would be in the public interest, to prohibit the issuance
of a broadcast license to, or the holding of a broadcast license by, any
corporation directly or indirectly controlled by any other corporation of which
more than 25% of the capital stock is beneficially or nominally owned or voted
by Aliens. The FCC has issued interpretations of existing law under which these
restrictions in modified form apply to other forms of business organizations,
including partnerships.

MULTIPLE AND CROSS OWNERSHIP

    Under the FCC's rules, an individual or entity may hold attributable
interests in an unlimited number of television stations nationwide, subject to
the restriction that no individual or entity may have an attributable interest
in television stations reaching, in the aggregate, more than 35% of the national
television viewing audience (subject to a 50% discount in the number of
television households attributed to any UHF station).

    The FCC's "television duopoly" rule bars any entity from having attributable
interests in two television stations in the same Nielsen Designated Market Area
(DMA) unless: (1) one of the two stations is not among the top four in audience
share and (2) at least eight independently owned and operated commercial and
noncommercial television stations will remain in the DMA if the proposed
transaction is consummated. The rule also permits common ownership of two
television stations with overlapping service contours if they are assigned to
different DMAs or where one of the stations to be commonly owned has failed, is
failing or is unbuilt or where extraordinary public interest factors are
present.

    Under the FCC's current Attribution Rules, a party will be deemed to have a
cognizable interest in a television or radio station, cable system or daily
newspaper that triggers the FCC's cross-ownership restrictions if (1) it is a
non-passive investor and it owns 5% or more of the voting stock in the media
outlet; (2) it is a passive investor (i.e., bank trust department, insurance
company or mutual fund) and it owns 20% or more of the voting stock; or (3) its
interest (which may be in the form of debt or equity (even if non-voting), or
both) exceeds 33% of the total asset value of the media outlet and it either
(i) supplies at least 15% of a station's weekly broadcast hours or (ii) has an
attributable interest, independent of this total asset rule, in another media
outlet in the same market.

    The FCC has eliminated its single majority shareholder exception, which
previously enabled a single shareholder that owned more than 50 percent of a
media outlet's voting stock to be the only attributable shareholder in that
outlet, even if other shareholders in that media outlet had interests (such as
5% or more of the voting stock) that otherwise would have caused them to be
attributable. All interests that were deemed to be non-attributable based on the
single majority shareholder exception as of January 2001 will continue to be
treated as non-attributable interests.

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DIGITAL TELEVISION

    The FCC has taken a number of steps to implement digital television service
(including high-definition television) in the United States. The table of
digital allotments provides each existing television station licensee or
permittee with a second broadcast channel to be used during the transition to
digital television, conditioned upon the surrender of one of the channels at the
end of the digital television transition period.

    The digital television implementing rules permit broadcasters to use their
assigned digital spectrum flexibly to provide either standard or high-definition
video signals and additional services, including, for example, data transfer,
subscription video, interactive materials, and audio signals, subject to the
requirement that they continue to provide at least one free, over-the-air
television service. The FCC has set a target date of 2002 for completion of
construction of digital television facilities and 2006 for expiration of the
digital transition period, subject to biennial reviews to evaluate the progress
of digital television, including the rate of consumer acceptance.

    On September 12, 2001, the FCC plans to auction the 700 MHz spectrum
currently occupied by television broadcast stations on Channels 60-69 for new
wireless uses. Despite the scheduled auction, broadcasters will not be required
to cease operating on Channels 60-69 until December 31, 2006 (the scheduled end
of the DTV transition period). However, the FCC has adopted rules that will
allow television stations to vacate their 700 MHz spectrum on an expedited basis
though voluntarily negotiated agreements between broadcast licensees and the
high bidders in the 700 MHz auction.

    USAi continually reviews developments relating to the FCC's digital
television proceedings, and the digital television industry generally. Material
developments in this regard could have an impact on USAi's businesses. For
example, low-power television stations, including those owned by USAi, as well
as other HSN low-power television affiliates, may have to cease operations due
to irremediable interference to or from new digital television allocations.
However, under procedures established in the digital television rulemaking
proceeding, licensees of these low-power television stations may file
applications for authorization to shift their operations to an alternative
channel if a viable alternative can be identified.

CHILDREN'S TELEVISION PROGRAMMING

    Under legislation enacted in 1990, the amount of commercial matter that may
be broadcast during programming designed for children 12 years of age and
younger is limited to 12 minutes per hour on weekdays and 10.5 minutes per hour
on weekends. In addition, the FCC has adopted a guideline for processing
television station renewals under which stations are found to have complied with
the Children's Television Act if they broadcast three hours per week of "core"
children's educational programming, which, among other things, must have as a
significant purpose serving the educational and informational needs of children
16 years of age and younger. A television station found not to have complied
with the "core" programming processing guideline could face sanctions, including
monetary fines and the possible non-renewal of its broadcasting license, if it
has not demonstrated compliance with the Children's Television Act in other
ways.

TELEVISION VIOLENCE

    As part of a directive in the Telecommunications Act, the broadcast and
cable television industries have adopted, and the FCC has approved a voluntary
content ratings system which, when used in conjunction with so-called "V-Chip"
technology, would permit the blocking of programs with a common rating. The FCC
directed that all television receiver models with picture screens 13 inches or
greater be equipped with "V-Chip" technology under a phased implementation that
began on July 1, 1999. USAi cannot predict how changes in the implementation of
the ratings system and "V-Chip" technology will affect its business.

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EEO

    The FCC recently adopted equal employment opportunity rules, which require
stations to widely disseminate information regarding job openings, maintain
records of their equal employment opportunity program and outreach efforts,
prepare annual employment reports and file, with the FCC, certifications of
compliance with the equal employment opportunity program every other year.
However, the FCC's rules were struck down as unconstitutional by the U.S. Court
of Appeals for the D.C. Circuit in January 2001. Although the courts ruling does
not become effective until the court issues its mandate, on January 31, 2001,
the FCC suspended its EEO rules.

MUST-CARRY/RETRANSMISSION CONSENT

    Television broadcasters are required to make triennial elections to exercise
either "must-carry" or "retransmission consent" rights with respect to their
carriage by cable systems in each broadcaster's local market. By electing
must-carry rights, a television broadcaster demands carriage on a specified
channel on cable systems within its television market (defined by Nielsen as a
Designated Market Area (DMA)). Alternatively, if a television broadcaster
chooses to exercise retransmission consent rights, it can prohibit cable systems
from carrying its signal or grant the appropriate cable system the authority to
retransmit the broadcast signal for a fee or other consideration. Home Shopping
Network is affected by the must-carry rule. The FCC currently is conducting a
rulemaking proceeding to determine whether, in certain circumstances, it should
require carriage of a television station's digital and analog signals.

SHVIA

    The Satellite Home Viewer Improvement Act ("SHVIA"), which was enacted on
November 29, 1999 provides, among other things, for a statutory copyright
license to enable satellite carriers to retransmit local television broadcast
stations into the stations' respective local markets. SHVIA does not require
satellite carriers to deliver local stations in into their local markets--so
called "local-into-local" service. However, as of January 1, 2002, a satellite
carrier that chooses to carry at least one local television broadcast station
signal pursuant to the statutory copyright must also carry any other full power
local television station in the market that requests carriage. In certain
instances, a satellite carrier is not required to carry duplicative signals of
commercial television stations serving the same local market. Satellite carriers
will be prohibited from providing local-into-local service without the consent
or must-carry election of such station, but stations will be obligated to engage
in good faith retransmission consent negotiations with the carriers.

CLOSED CAPTIONING

    The FCC's closed captioning rules, which became effective January 1, 1998,
provide for the phased implementation, beginning in the year 2000, of a
universal on-screen captioning requirement with respect to the vast majority of
video programming. The captioning requirement applies to programming carried on
broadcast television stations and cable programming networks. Home Shopping Club
has applied to the FCC for waivers of the closed captioning rules. Parties are
not required to comply with the closed captioning rules while they have waiver
requests pending.

OTHER BROADCAST TELEVISION REGULATIONS

    The FCC continues to enforce its regulations concerning "indecent"
programming, political advertising, environmental concerns, technical operating
matters and antenna tower maintenance and marking. In addition, FCC regulations
governing network affiliation agreements mandate that television broadcast
station licensees retain the right to reject or refuse network programming or to
substitute programming that the licensee reasonably believes to be of greater
local or national importance. Violation of FCC regulations

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<PAGE>
can result in substantial monetary forfeitures, periodic reporting conditions,
short-term license renewals and, in egregious cases, denial of license renewal
or revocation of license.

CABLE TELEVISION RATE REGULATION

    The Telecommunications Act phased out cable rate regulation, except with
respect to the "basic" tier, which must include all local broadcast stations and
public, educational, and governmental access channels and must be provided to
all subscribers. Home Shopping Network and America's Store programming are
distributed on the basic tier in some areas, and "expanded basic" tiers in other
areas. Rate regulation of all non-basic tiers including the expanded basic tiers
was eliminated as of March 31, 1999. The local franchising authorities are
primarily responsible for regulating the basic tier of cable service. Because
USAi's revenues are, to some degree, affected by changes in cable subscriber
rates, increased regulation of cable subscriber rates, or a reduction in the
rates that cable service providers may charge customers, could have a
significant impact on USAi's revenues.

PROPOSED CHANGES

    Congress and the FCC have under consideration, and in the future may
consider and adopt, new laws, regulations and policies regarding a wide variety
of matters that could affect, directly or indirectly, the operation, ownership
and profitability of USAi's broadcast stations and broadcast and cable
programming networks. In addition to the changes and proposed changes noted
above, such matters include, for example, rate regulation for upper tiers of
service, political advertising rates and potential restrictions on the
advertising of products (beer, wine and hard liquor, for example). Other matters
that could affect USAi's regulated media businesses include technological
innovations and developments generally affecting competition in the mass
communications industry, such as direct radio and television broadcast satellite
service, the continued establishment of wireless cable systems, digital
television and radio technologies, and the advent of telephone company
participation in the provision of video programming service.

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OTHER REGULATORY CONSIDERATIONS

    The summary presented above does not purport to be a complete discussion of
all provisions of the Communications Act or other congressional acts or of the
regulations and policies of the FCC. For further information, you should review
the Communications Act, other congressional acts, and regulations and public
notices promulgated from time to time by the FCC. There are additional
regulations and policies of the FCC and other federal agencies that govern
political broadcasts, public affairs programming, equal opportunity employment
and other matters affecting USAi's and USANi LLC's business and operations.

    In addition, increasing concern over consumer privacy, including regulations
relating to the use of the Internet with customer care and service, has let to
the introduction from time to time of proposed legislation, including at the
federal level, that could impact the Company's businesses. The Company cannot
predict whether any of these types of legislation will be enacted and what
effect, if any, it would have on the Company and its subsidiaries.

              TRADEMARKS, TRADENAMES, COPYRIGHTS AND DOMAIN NAMES

    USANi LLC has registered and continues to register, when appropriate, its
trade and service marks as they are developed and used, and USANi LLC vigorously
protects its trade and service marks. USANi LLC believes that its marks are a
primary marketing tool for promoting its identity. USANi LLC also obtains
copyrights with respect to its original programming as appropriate and registers
the domain names of its Internet websites.

                                  COMPETITION

CABLE AND STUDIOS

    USA CABLE

    VIEWERSHIP AND ADVERTISING REVENUES.  USA Cable competes for access to its
customers and for audience share and revenue with broadcasters and other forms
of entertainment. Cable operators and other distributors only contract to carry
a limited number of the available networks. Therefore, they may decide not to
offer a particular network to their subscribers, or they may package a network
with other networks in a manner that only a portion of their subscribers will
receive the service (for example, by charging an additional fee). In addition,
there has been increased consolidation among cable operators, so that USA
Cable's networks have become increasingly subject to the carriage decisions made
by a small number of operators. This consolidation may reduce the per-subscriber
fees received from cable operators in the future. The consolidation also means
that the loss by any network of any one or more of its major distributors could
have a material adverse impact on that network. The competition for advertising
revenues also has become more intense as the number of television networks has
increased. While many factors affect advertising rates, ultimately they are
dependent on the numbers and types of viewers which a program attracts. As more
networks compete for viewers, it becomes increasingly difficult to increase or
even maintain a network's number of viewers. Moreover, to do so may require a
network to spend significantly greater amounts of money on programming.
Therefore, greater pressure may be placed on the networks' ability to generate
advertising revenue increases consistent with the increases they have achieved
in the past. Both USA Cable and Studios USA are affected by competition for
advertising revenues.

    THIRD-PARTY PROGRAMMING.  The competition for third-party programming is
likely to increase. Many networks, including USA Cable's networks, are
affiliated with companies that produce programming. This programming is becoming
increasingly difficult to acquire by anyone other than the affiliated networks.
As a result, with affiliated programming already generally spoken for, there is
likely to be strong competition to acquire remaining third party
(non-affiliated) programming.

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    STUDIOS USA

    PROGRAMMING.  Studios USA operates in a highly competitive environment. The
production and distribution of television programming are highly competitive
businesses. Television programs produced by Studios USA compete with all other
forms of network and syndication programming, as well as other forms of
entertainment. Competition is also faced from other major television studios and
independent producers for creative talent, writers and producers. The
profitability of Studios USA is dependent upon factors such as public taste that
is volatile, shifts in demand, economic conditions and technological
developments.

    In 1995, the FCC repealed its financial interest and syndication rules
("fin-syn rules"). The fin-syn rules were adopted in 1970 to limit television
network control over television programming and to foster the development of
diverse programming sources. The rules had restricted the ability of the three
established, major U.S. televisions networks (I.E., ABC, CBS and NBC) to own and
syndicate television programming. The repeal of the rules has increased in-house
production of television programming for the networks' own use. As a result of
the repeal of the fin-syn rules, the industry has become increasingly vertically
integrated, with virtually all of the major broadcast networks being aligned
with a major studio. In addition, two major broadcast networks have formed their
own in-house production units. There can be no assurance that these changes will
not have a negative impact on Studios USA's business as its network customers
are now able to choose between their own product and Studios USA's product in
making programming decisions. Nonetheless, up through the current 2000/2001
season, Studios USA has continued to remain one of the primary independent
suppliers of U.S. television programming.

ELECTRONIC RETAILING

    HOME SHOPPING NETWORK

    The Home Shopping Network business operates in a highly competitive
environment. It is in direct competition with retail merchandisers, other
electronic retailers, direct marketing retailers such as mail order companies,
companies that sell from catalogs, other discount retailers and companies that
market through computer technology.

    Home Shopping Network and QVC, Inc. are currently the two leading electronic
retailing companies. Liberty, a subsidiary of AT&T which holds a substantial
equity interest in USAi and USANi LLC, currently owns 43% of QVC but has entered
into a stockholders agreement with Comcast Corporation, which owns 57% of QVC,
under which Comcast Corporation controls the day to day operations of QVC. There
are other companies, some having an affiliation or common ownership with cable
operators, that now market merchandise by means of live television. A number of
other entities are engaged in direct retail sales businesses which utilize
television in some form and which target the same markets in which Home Shopping
Network operates. Some competitors of the Home Shopping Network business are
larger and more diversified than USAi.

    VIEWERSHIP.  The Home Shopping Network business also competes for access to
its customers and for audience share and revenue with broadcasters and
conventional forms of entertainment and information, such as programming for
network and independent broadcast television stations, basic and pay cable
television services, satellite master antenna systems, home satellite dishes and
home entertainment centers, newspapers, radio, magazines, outdoor advertising,
transit advertising and direct mail. In particular, the price and availability
of programming for cable television systems affect the availability of these
channels for HSN, America's Store and HSE programming and the compensation which
must be paid to cable operators for carriage of HSN, America's Store and HSE
programming.

    CHANNEL CAPACITY.  In addition, due to a number of factors, including the
development of cable operator owned programming, the competition for channel
capacity has substantially increased. With the advent of digital cable and new
compression technologies on the horizon, this competition for

                                       24
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channel capacity may substantially decrease, although additional competitors may
have the opportunity to enter the marketplace. No prediction can be made with
respect to the viability of these technologies or the extent to which they will
ultimately impact the availability of channel capacity. A substantial portion of
USAi's businesses are affected by changes in channel capacity and competition
among programming providers for available channel capacity.

    HSN INTERNATIONAL

    HSN's largest competitor internationally is QVC. QVC operates QVC The
Shopping Channel in the United Kingdom and also QVC Deutschland GmbH in Germany.
QVC has also announced that it will begin a television shopping channel in Japan
in the spring of 2001. Other competitors to HSN in the international area
include Bertelsmann, which has also announced plans to begin a German-language
television shopping channel in Germany sometime in 2001. In France and portions
of Belgium, the French channels TF1 and M6 each have several hours daily of
French-language television shopping programming. Additionally, several other
companies have announced plans to begin television shopping channels in China
that would compete with HSN's interest in TVSN there. There are also other
operators throughout the world using infomercials and small amount of live
programming that compete with HSN's international operations.

    HSN INTERACTIVE

    HSN.COM.  Home Shopping Network operates HSN.com, an Internet retailing
service that competes with numerous other on-line retail operations, including
iQVC, which is operated by Home Shopping Network's principal television
retailing competitor. Home Shopping Network/HSN.com potentially face competition
from a number of large online communities and services that have expertise in
developing online commerce. USAi believes that the principal competitive factors
in this market are scale, selection of goods, customer service, reliability of
delivery, brand recognition, website convenience and accessibility, price,
quality of search tools and system reliability.

    DIRECT SELLING PROGRAMS/OTHER TRANSACTIONAL TELEVISION OPPORTUNITIES.  Home
Shopping Network's businesses of producing and distributing Direct Selling
Programs and developing other transactional television opportunities compete
with numerous other infomercial and other businesses, some of which have
extensive experience in production, distribution and fulfillment. USAi believes
that the principal competitive factors in these markets are access to and
selection of goods and prominent personalities, price, production qualities,
market understanding, media selection and scale.

USA ELECTRONIC COMMERCE SOLUTIONS

    ECS competes with a number of companies in the online ventures category,
including Global Sports, FanBuzz and eVenator. ECS also competes with companies
that provide certain portions of its online store operations, including
fulfillment and customer service providers, transaction enablers and consulting
firms. In the area of direct marketing, ECS competes in a competitive and
fractured business against various online and offline marketers. In addition, as
the market for electronic retailing grows, other service providers may increase
their efforts to develop services that compete with those offered by ECS. ECS
believes that the principal competitive factors in its business are scalability,
depth of e-commerce offering and ability to offer end-to-end solutions. There
can be no assurance that ECS will be able to compete successfully against
current and future competitors.

STYLECLICK

    Styleclick faces competition from companies that currently provide
e-commerce services similar to those offered by Styleclick, including Blue
Martini, BEA, CrossCommerce, Digital River, Vcommerce, Global Sports, InterWorld
and Escalate. Certain of Styleclick's competitors may be advantaged as compared
to Styleclick with respect to technology, client lists, scale and access to
capital. In addition, Styleclick potentially faces competition from companies,
such as Amazon.com, that possess the

                                       25
<PAGE>
technology and expertise necessary to effectively operate large-scale e-commerce
businesses, but that may not currently offer such services to third parties. In
addition, Styleclick's consumer businesses face competition from auction
companies including eBay, Yahoo! Auctions, uBid, Microsoft Auctions,
Auctionwatch and FairMarket, that have significantly stronger brands, higher
usage and greater resources than Styleclick. In addition, Styleclick's
challenges in meeting its obligations to its existing customers may make it
difficult for Styleclick to attract or adequately service new customers.
Styleclick's management believes that its recent purchase of the technology
platform of MVP.com, Inc. will improve its competitive position in the
marketplace, although it cannot guarantee that this will be the case. Styleclick
believes that the principal competitive factors in this market are scale,
selection of goods, customer service, reliability of delivery, brand
recognition, website convenience and accessibility, price, quality of search
tools and system reliability.

                                   EMPLOYEES

    As of the close of business on December 31, 2000, USANi LLC and its
subsidiaries employed approximately 6,890 full-time employees, with
approximately 1,080 employees employed by USA Cable and Studios USA, 5,520
employees employed by Electronic Retailing, 200 employees employed by
Styleclick, and 90 employees employed by USA Electronic Commerce Solutions.
USANi LLC believes that it generally has good employee relationships, including
with employees represented by unions and guilds.

ITEM 2. PROPERTIES

    USANi LLC's facilities for its management and operations are generally
adequate for its current and anticipated future needs. USANi LLC's facilities
generally consist of executive and administrative offices, fulfillment
facilities, warehouses, operations centers, call centers, television production
and distribution facilities, satellite transponder sites and sales offices.

    All of USANi LLC's leases are at prevailing market (or "most favorable")
rates and, except as noted, with unaffiliated parties. USANi LLC believes that
the duration of each lease is adequate. USANi LLC believes that its principal
properties, whether owned or leased, are adequate for the purposes for which
they are used and are suitably maintained for such purposes. Most of the office/
studio space is substantially utilized, and where significant excess space
exists, USANi LLC leases or subleases such space to the extent possible. USANi
LLC anticipates no future problems in renewing or obtaining suitable leases for
its principal properties.

CORPORATE

    USANi LLC maintains its principal executive offices at Carnegie Hall Tower,
152 West 57th Street, New York, New York which consists of approximately 29,850
square feet leased by USAi through October 30, 2005.

CABLE AND STUDIOS

    The executive offices of USA Cable are located at 1230 Avenue of the
Americas, New York, New York 10020. USA Cable leases approximately 168,000
square feet at this office space under a lease that continues until March 31,
2005, subject to two five-year options to continue the term. USA Cable also has
smaller offices in Chicago (affiliate relations and sales), Detroit (sales), and
Los Angeles (affiliate relations, sales and programming).

    USA Cable also leases approximately 55,000 square feet in a facility in
Jersey City, New Jersey, where USA Cable has its broadcast operations center.
This space is used to originate and transmit the USA Network, Sci Fi Channel,
Trio, and NWI signals. Post-production for USA Network, Sci Fi Channel, and
Trio, including audio production, editing, graphics and duplication, also is
performed at this location. The lease for this space continues through
April 30, 2009, and there are options to continue the term beyond that time.

                                       26
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    Studios USA currently conducts its domestic television production and
distribution operations primarily from its executive and administrative offices
in West Hollywood, California (in a facility owned during 2000 by Ticketmaster
and sold, effective February 1, 2001, to USAi, located at 8800 Sunset Boulevard,
West Holywood, California 90069) and in New York City (in leased office space
located at 1325 Avenue of the Americas, New York, New York 10019). Additionally,
Studios USA has four domestic sales offices located in Atlanta, Chicago, Dallas
and New York City. Production facilities in Southern California are leased
primarily from Universal on its Universal City lot on an as-needed basis
depending upon production schedules. Studios USA also leases production
facilities in New York City--for the production of LAW & ORDER, LAW & ORDER:
SPECIAL VICTIMS UNIT, DEADLINE, WELCOME TO NEW YORK, SALLY and MAURY, in
California for FIRST YEARS and in Chicago for production of THE JERRY SPRINGER
SHOW.

ELECTRONIC RETAILING

    HOME SHOPPING NETWORK

    Home Shopping Network owns an approximately 480,000 square foot facility in
St. Petersburg, Florida, which houses its Home Shopping Network television
studios, broadcast facilities, administrative offices and training facilities.

    Home Shopping Network owns two warehouse-type facilities totaling
approximately 84,000 square feet near Home Shopping Network's main campus in St.
Petersburg, Florida. These facilities have been used for returns processing,
retail distribution and general storage.

    Home Shopping Network leases a 41,000 square foot facility in Clearwater,
Florida for its video and post production operations.

    Home Shopping Network owns and operates a warehouse consisting of 163,000
square feet located in Waterloo, Iowa, which is used as a fulfillment center. In
addition, Home Shopping Network rents additional space in Waterloo, Iowa
consisting of 106,000 square feet.

    Home Shopping Network owns and operates a warehouse located in Salem,
Virginia, consisting of approximately 780,000 square feet, which is used as a
fulfillment center. In addition, Home Shopping Network leases one additional
location in Salem, Virginia consisting of 194,750 square feet and two additional
locations in Roanoke, Virginia consisting of 70,000 square feet and 383,000
square feet.

    Home Shopping Network leases a 817,750 square foot warehouse in Fontana,
California which it expects to open as an additional fulfillment facility in
2001.

    Home Shopping Network's retail outlet subsidiary leases five retail stores
in the Tampa Bay, Orlando and Chicago areas totaling approximately 105,785
square feet.

    HSN INTERNATIONAL

    HOT Germany owns no real estate in Germany, although it leases approximately
3,200 square meters in Ismaning, Germany (outside Munich) for offices and
studios.

USA ELECTRONIC COMMERCE SOLUTIONS

    The executive offices of USA Electronic Commerce Solutions are located at
810 Seventh Avenue, 18th Floor, New York, New York. Approximately 15,500 square
feet are maintained under a lease expiring in 2010.

                                       27
<PAGE>
STYLECLICK

    Styleclick's headquarters are in Los Angeles, where it leases 23,000 square
feet under a lease expiring 2005. Styleclick has a second location in Culver
City, California with 23,000 square feet under a lease expiring in 2006.
Styleclick's New York office consists of 4,000 square feet under a month to
month arrangement with Ticketmaster. Styleclick leases a 4800 square foot
facility in High Point, North Carolina under a lease that expires in 2004.
Styleclick leases an additional 10,000 square feet in Los Angeles, under a lease
expiring in 2002, which it subleases to a third party.

ITEM 3. LEGAL PROCEEDINGS

    In the ordinary course of business, USAi and USANi LLC and their
subsidiaries are parties to litigation involving property, personal injury,
contract and other claims. The amounts that may be recovered in these matters
may be subject to insurance coverage. Although amounts recovered in litigation
are not expected to be material to the financial position or operations of USAi
and USANi LLC, this litigation, regardless of outcome or merit, could result in
substantial costs and diversion of management and technical resources, any of
which could materially harm our business.

ASCAP LITIGATION

    USA Cable's networks, USA Network, Sci Fi Channel, Trio and NWI, along with
almost every other satellite-delivered network, are involved in continuing
disputes regarding the amounts to be paid by it for the performance of
copyrighted music in the repertories of the American Society of Composers,
Authors and Publishers ("ASCAP") and by Broadcast Music, Inc. ("BMI"). The
payments to be made to ASCAP will be determined in a "rate court" proceeding
under the jurisdiction of the U.S. District Court for the Southern District of
New York. In the initial phase of this proceeding, it was determined that USA
Network must pay ASCAP interim license fees calculated at 3% of the gross
revenues of USA Network. The same interim fee subsequently has been agreed to
for Sci Fi Channel, Trio and NWI. This fee level is subject to upward or
downward adjustment based on the ultimate outcome of the rate court proceeding,
or as the result of future negotiations. The relevant time periods are
subsequent to January 1, 1986 with respect to USA Network and subsequent to
launch with respect to Sci Fi Channel, Trio and NWI. As to BMI, interim fees are
being paid by USA Network, Sci Fi Channel, Trio and NWI. These interim fees are
subject to upward or downward adjustment, based on a future negotiated
resolution or submission of the issue to BMI's own federal "rate court." USA
Network's fees to BMI are final through June 30, 1992 and interim thereafter.
The fees of the remaining services are interim from their dates of launch. USAi
cannot predict the final outcome of these disputes, but does not believe that it
will have a material impact on its financial results.

HOME SHOPPING NETWORK CONSUMER CLASS ACTION

    On November 15, 1999, Home Shopping Network was named as a defendant in a
consumer class action lawsuit entitled BRUCE TOMPKINS, HENRIETTA BUCK AND JODI
HABEL HILL ON BEHALF OF THEMSELVES AND ALL OTHER SIMILARLY SITUATED INDIVIDUALS
V. PROTEVA, INC., HOME SHOPPING NETWORK, INC. D/B/A HOME SHOPPING NETWORK AND
THE HOME SHOPPING NETWORK, JOHN ROBERTS, VIVIAN ROBERTS MCKINLEY, KN CHAN,
WILLIAM LYNCH AND BRIAN JORDAN, filed in the Chancery Division of the Circuit
Court of Cook County, Illinois, Case No. 99 CH 12013. The action is purportedly
brought on behalf of consumers who were alleged to have purchased a Proteva
personal computer from one of the defendants and experienced one of the three
following conditions: (a) the computer was or became defective upon purchase or
soon thereafter, (b) a defendant refused or failed to honor the rebate offer
which was offered as part of the sale, or (c) a defendant refused or failed to
provide customer service as purportedly advertised. In the complaint, the
plaintiffs assert causes of action for consumer fraud, breach of implied
warranty of merchantability and unjust enrichment and seek compensatory and
punitive damages along with interest, costs and attorneys' fees. Home Shopping
Network has filed an answer to the complaint.

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<PAGE>
    The plaintiffs filed an amended class action complaint that, among other
things: (i) added an additional named plaintiff, Susan Leff (ii) added Home
Shopping Club LP, Warrantech Helpdesk, Inc., Banctech Service, Inc. and
Timespace Internet, Inc. as named defendants, (iii) removed two individuals as
named defendants, Vivian Roberts McKinley and Kn Chan, and (iv) expanded the
existing warranty cause of action to also apply to breach of express warranty.
On May 9, 2000, Home Shopping Network, Inc. and Home Shopping Club LP (the "HSN
Defendants") filed a motion to dismiss the amended complaint. On May 23, 2000,
the Cook County Circuit Court addressed the HSN Defendants' motion to dismiss by
entering an Order that, in pertinent part, required the plaintiffs to file a
second amended complaint. On June 6, 2000, the plaintiffs filed a second amended
class action complaint that, among other things, added an additional named
plaintiff, Anastasia Kolias, and asserted two additional causes of action for
negligent misrepresentation and breach of contract. The HSN Defendants have
filed an answer and affirmative defenses to the second amended complaint.

    On December 1, 2000, the plaintiffs filed a third amended class action
complaint that, among other things: (i) added an additional named plaintiff,
Wayne Varner, (ii) apparently removed three corporate defendants, Warrantech
Helpdesk, Inc., Banctec Services Corp. and Timespace Internet, Inc., and
(iii) removed causes of actions for negligent misrepresentation and breach of
contract. The HSN Defendants have filed an answer and affirmative defenses to
the third amended complaint. The parties are engaged in the discovery process.
On February 27, 2001, the plaintiffs filed a motion for class certification. The
HSN Defendants intend to oppose the motion for class certification and will
continue to vigorously defend this action.

URBAN LITIGATION

    Beginning in October 1996, Home Shopping Club, Inc. ("HSC"), predecessor in
interest to HSN LP, withheld monthly payments under the Affiliation Agreement
with Urban Broadcasting Corporation due to breaches of the Affiliation Agreement
by Urban. Urban contested this action. In addition, on January 10, 1997, Urban
filed an Emergency Request for Declaratory Ruling with the FCC requesting an
order that the requirement in the Affiliation Agreement that Urban broadcast at
full-power violates the FCC's rules, or alternatively, requesting that the FCC
revise the terms of the Affiliation Agreement to bring it into compliance with
its Rules. Urban also requested that the FCC undertake an inquiry into USAi's
actions of withholding payments to Urban to determine whether USAi is fit to
remain an FCC licensee. On December 17, 1999, Urban filed a Supplement to
Emergency Request for Declaratory Relief requesting that the FCC (1) set a
deadline for reformation of several agreements between the parties, (2) rule
that the station's power authorized level is lower than the level set by current
authorizations and (3) agree not to pass on any applications for assignment or
transfer of the station. Certain entities controlled by USAi filed an opposition
to this Request on January 10, 2000 to which Urban replied on January 27, 2000.
As of this date, no ruling has been issued by the FCC.

    On October 23, 1997, HSC filed suit against Urban in the Circuit Court for
Arlington County, Virginia seeking a judicial declaration that it was entitled
to withhold the payments in dispute because of Urban's breaches of the
Affiliation Agreement. Urban responded with counterclaims and began a related
action in the Circuit Court against HSC, HSN, Inc. (now USAi) and Silver King
Broadcasting of Virginia, Inc. (now USA Station Group of Virginia, Inc.
("USA-SGV")). Urban asserted contract and tort claims related to HSC's decision
to withhold affiliation payments. A trial was held on April 5-7, 1999. At the
conclusion of Urban's case, the court ruled that Urban's evidence be struck and
that judgment be entered in favor of HSC, USAi and USA-SGV on all counts of
Urban's First Amended Motion for Judgment. Further, the court ruled that the
related chancery action, which had been consolidated with the law action for
trial, be severed for further proceedings at some future date. A Final Order of
Judgment concerning the above rulings was entered by the court on May 5, 1999.
On May 3, 1999, HSC, USAi and USA-SGV filed a Motion for Summary Judgment
directed to all remaining counts in the chancery action. Urban has appealed the
judgment in the law action to the

                                       29
<PAGE>
Virginia Supreme Court. In addition, on June 11, 1999, judgment was entered in
favor of HSC, USAi and USA-SGV on all Urban's counterclaims in the chancery
suit, and the trial court granted HSC's request for a declaratory judgment that
HSC had not breached the Affiliation Agreement. Urban failed to file a timely
appeal of the judgment in the chancery suit. Based on Urban's failure to appeal
the chancery suit, USAi has moved to dismiss Urban's appeal in the related law
action. A hearing on the motion to dismiss was heard on February 16, 2000. On
March 1, 2000, the Virginia Supreme Court granted the motion to dismiss and
dismissed Urban's petition for appeal related to the at-law action. On or about
March 15, 2000, Urban filed a petition for rehearing which was denied by the
Virginia Supreme Court on April 21, 2000.

    On April 20, 2000, Urban filed a motion in the U.S. Bankruptcy Court for the
Eastern District of Virginia seeking to have that Court reopen Urban's prior
Chapter 11 case and clarify certain factual and legal matters contained within
the Court's September 30, 1996 confirmation order. In addition, Amresco Funding
Corporation, the entity that provided Urban with bankruptcy exit financing,
joined in Urban's motion. By Order dated May 3, 2000, the Court denied Urban's
motion. On May 15, 2000, Urban filed a motion requesting that the Court
reconsider its May 3, 2000 ruling, or, in the alternative, amend findings of
fact. By Memorandum Opinion and Order dated June 9, 2000, the Court denied
Urban's motion to reconsider, or, in the alternative, to amend findings of fact.

    On November 12, 1999, the Arlington County Circuit Court granted USA-SGV a
default judgment against Urban arising from Urban's defaults on the Loan
Agreement for $10,552,060.64, plus interest, plus $8,131 in attorneys fees and
costs. Urban has noted an appeal of this judgment. Urban's appeal of this
judgment was denied by the Virginia Supreme Court on June 2, 2000, and Urban's
petition for rehearing was denied on July 21, 2000.

    On August 1, 2000, Urban and Mr. Theodore M. White, President and owner of
all of the voting stock of Urban, filed voluntary petitions under Chapter 11 of
the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the District of
Columbia. USA-SGV filed motions on August 3, 2000 requesting the Court to:
(a) transfer venue of Urban's bankruptcy case from the U.S. Bankruptcy Court for
the District of Columbia to the U.S. Bankruptcy Court for the Eastern District
of Virginia, and (b) appoint a Chapter 11 trustee for Urban. The U.S. Bankruptcy
Court for the District of Columbia granted USA-SGV's motion to transfer venue.
An evidentiary hearing on USA-SGV's motion for entry of an order directing
appointment of a Chapter 11 trustee for Urban was scheduled to occur before the
Bankruptcy Court for the Eastern District of Virginia on November 29, 2000. On
November 29, 2000, the parties entered into a Stipulation and Consent Order Re
Motion to Appoint Chapter 11 Trustee. The foregoing order is in the process of
being administered by the parties. The Company does not believe that this
litigation will have a material impact on its financial results.

MARKETINGWORKS LITIGATION

    On October 14, 1999, Marketingworks, Inc., a home video distribution
company, filed a complaint against Universal Studios Home Video and Studios USA
Television Distribution LLC ("Universal/ USA") in Los Angeles Superior Court,
alleging contract and tort claims in connection with a home video series
consisting of out-takes from the Jerry Springer Show. Marketingworks contends
that in January, 1997, it disclosed confidential marketing plans to Universal
Television, which were subsequently appropriated for use in the "out-take" home
video series. In January, 2000, Universal/ USA removed the case to Federal Court
on the basis of copyright preemption and because Marketingworks sought federal
remedies under the Lanham Act. Trial is currently set for July 3, 2001.
Universal/USA believes it is unlikely that this claim will present any material
liability to the Company and intends to vigorously defend against the lawsuit.

                                       30
<PAGE>
RTL LITIGATION

    On August 25, 2000, RTL Plus Deutschland Fernsehen GMBH & Co. Betriebs-KG,
Companie Luxembourgeoise de Telediffusion S.A. and UFA Film-Und
Fernseh-GMBH &Co. KG (collectively "RTL") filed a complaint in the Netherlands
against Universal Studios International B.V. ("USI"). USI, the international
distribution entity of Universal Studios, Inc., has the rights, subject to
various exemptions, to distribute internationally certain television programs
owned by Studios USA and other USAi entities. The complaint involves a 10-year
"output" agreement between the RTL and USI, signed July 30, 1996, pursuant to
which, among other things, certain television programs owned by Studios USA and
other USAi entities are distributed in Germany (the "RTL Output Agreement"). The
RTL Output Agreement also includes "co-production" provisions under which RTL
acquires an equity interest in certain programs. The complaint, based on
equitable doctrines of "mistake of fact" and "unforeseen circumstances,"
requests the court to modify or nullify RTL's licensing and "co-production"
obligations with respect to current television programs. Studios USA and its
affiliated companies are not parties to the RTL Output. On November 22, 2000,
USAi moved to intervene or, alternatively, to join USI, in the Netherlands
proceeding. Studios USA and its affiliated entities believe the RTL complaint to
be without merit, and intend to vigorously protect their interests.

TRACY KEENAN WYNN, ET AL. V. NATIONAL BROADCASTING COMPANY, INC., ET AL.

    On October 20, 2000, plaintiffs, a group of television writers over the age
of forty, filed a purported class action in the United States District Court for
the Central District of California Western Division, against many talent
agencies, television networks and studios, including Studios USA LLC, alleging
that the defendants were discriminating against older writers by not hiring them
for writers positions. In November, 2000, plaintiffs filed an amended complaint
adding new plaintiffs, and alleging claims for relief against Studios USA LLC
(and others) for: (1) Violation of Federal and State Civil Rights Laws,
including the Age Discrimination in Employment Act, 29 U.S.C. Section 623, the
California Fair Employment and Housing Act, California Government Code Sections
12940 and 12941, and the New York Human Rights Law, N.Y. Exec. Law Section 296;
(2) Aiding and Abetting Violations of Civil Rights Laws; (3) Conspiracy to
Violate Civil Rights (with other commonly owned or affiliated defendants); and
(4) Breach of the Collective Bargaining Agreement under the Labor Management
Relations Act, 29 U.S.C. Section 301.

    Studios USA LLC has filed a motion to dismiss this action, or in the
alternative, to sever the claims against Studios USA LLC from the claims against
the other defendants, based on, among other things, the fact that plaintiffs
have alleged a twenty-year conspiracy against a company that was incorporated
only several years ago, and the fact that there are a lack of specific
allegations against Studios USA LLC. The hearing on the motion, originally set
for February 12, 2001, was taken off the calendar and the judge has taken the
matter under submission without oral argument. Studios USA LLC believes it is
unlikely that this claim will present any material liability to the Company and
intends to vigorously defend against the lawsuit.

                                       31
<PAGE>
                                    PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

    The USANi LLC shares are not quoted on any stock exchange and are not
traded. The USANi LLC shares are exchangeable for shares of USAi common stock
and Class B common stock on a one-for-one basis. All outstanding shares are held
by USAi, Holdco, Universal and Liberty. On January 20, 2000, the Board of
Directors declared a two-for-one share split of USANi LLC shares, payable in the
form of a dividend to shareholders of record as of the close of business on
February 10, 2000. The 100% stock dividend was paid on February 24, 2000. All
share numbers give effect to such stock split.

ITEM 6. SELECTED FINANCIAL DATA

    The following table presents selected historical financial data of USANi LLC
or its predecessor company, where indicated, for each of the years in the
five-year period ended December 31, 2000. This data was derived from USANi LLC's
or its predecessor company's audited consolidated financial statements and
reflects the operations and financial position of USANi LLC or its predecessor
company at the dates and for the periods indicated. The information in this
table should be read with the financial statements and accompanying notes and
other financial data pertaining to USANi LLC included herein.

    EBITDA is defined as net income plus: (1) provision for income taxes,
(2) interest expense, (3) depreciation and amortization, including amortization
of cable distribution fees, and (4) minority interest. EBITDA is presented
because we believe it is a widely accepted indicator of our ability to service
debt as well as a valuation methodology for companies in the media,
entertainment and communications industries. EBITDA should not be considered in
isolation or as a substitute for measures of financial performance or liquidity
prepared in accordance with generally accepted accounting principles. EBITDA may
not be comparable to calculations of similarly titled measures presented by
other companies.

<TABLE>
<CAPTION>
                                               PREDECESSOR COMPANY                  USANI LLC
                                             -----------------------   ------------------------------------
                                                                YEAR ENDED DECEMBER 31,
                                             --------------------------------------------------------------
                                              1996(1)      1997(1)     1998(1)(2)    1999(3)      2000(4)
                                             ----------   ----------   ----------   ----------   ----------
                                                     (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                                          <C>          <C>          <C>          <C>          <C>
STATEMENTS OF OPERATIONS DATA:
Net revenues...............................  $1,017,740   $1,153,660   $2,332,825   $2,686,479   $3,360,132
Operating profit (loss)....................      41,186       61,142      231,730      343,595      264,274
Net earnings (loss)........................      20,620       16,255      125,535      394,988      329,877
BALANCE SHEET DATA (END OF PERIOD):
Working capital (deficit)..................  $    3,398   $   41,321   $  318,590   $  303,750   $  290,440
Total assets...............................   1,636,380    1,653,875    7,002,685    7,472,926    7,972,868
Long-term obligations, net of current
  maturities...............................          --           --      732,307      527,339      504,063
Members' equity............................   1,390,975    1,408,362    5,115,405    5,841,679    6,139,731
Other Data:
Net cash provided by (used in):
Operating activities.......................  $   23,123   $   40,237   $  278,274   $  427,698   $  360,239
Investing activities.......................     (10,733)     (49,971)  (1,400,559)     (16,774)    (245,800)
Financing activities.......................     (21,280)      16,302    1,334,166     (398,353)    (291,297)
Effect of exchange rate changes............          --           --           --           --        1,200
EBITDA.....................................      74,669      126,294      406,356      545,814      677,387
</TABLE>

--------------------------

(1) The consolidated statement of operations data for the years ended
    December 31, 1995 and 1996 represents the consolidated results of the
    predecessor to Holdco, which was the predecessor to USANi LLC, on a
    historical basis. On December 20, 1996, Holdco was merged into a subsidiary
    of USAi. The transaction was accounted for by USAi using the purchase method
    of accounting. The assets and liabilities of Holdco were adjusted as of
    December 31, 1996 to reflect their respective fair values and the excess of
    the purchase price,

                                       32
<PAGE>
    including expenses, over the fair value of identifiable net assets, was
    assigned to goodwill. For the period December 20 to December 31, 1996,
    Holdco's results of operations include net revenues of $30.6 million and net
    earnings of $0.3 million. Prior to the Universal transaction, the assets of
    Holdco consisted principally of the retail sales programs, Home Shopping
    Network and America' Store. The contributions of assets by USAi and Holdco
    to USANi LLC was accounted for as a merger of entities under common control,
    similar to the pooling of interests method of accounting for business
    combinations. Accordingly, the inception date of USANi LLC for accounting
    purposes is considered December 31, 1996, which is the date the assets and
    liabilities were deemed to be transferred to USANi LLC at USAi's historical
    cost. The consolidated statement of operations data for 1997 represents the
    consolidated results of Holdco. The consolidated statement of operations
    data for 1998 includes the consolidated results of Holdco for the period
    January 1 to February 12, 1998.

    USANi LLC is not subject to federal and stated income tax since its
    formation on February 12, 1998. Net earnings (loss) for USANi LLC's
    predecessor, Holdco, for the years ended December 31, 1995, 1996 and 1997
    and the period January 1 to February 12, 1998 include income tax expense
    (benefit) of ($33.3) million, $12.6 million, $30.3 million and
    $1.9 million, respectively.

    Given that equity interests in limited liability companies are not in the
    form of common stock and the change in capitalization from the predecessor
    companies, earnings per share data is not presented for USANi LLC.

(2) The consolidated statement of operations data include the operations of USA
    Cable and Studios USA since their acquisition by USAi from Universal on
    February 12, 1998.

(3) Net earnings for the year ended December 31, 1999 includes a pre-tax gain of
    $89.7 million related to the sale of securities.

(4) Includes a pre-tax gain of $104.6 million related to the Styleclick
    transaction and a pre-tax charge of $145.6 million related to impairment of
    Styleclick goodwill.

ITEM 7. MANAGEMENT'S DISCUSSIONS AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
  OF OPERATIONS

                                    GENERAL

    USANi LLC (the "Company" or "LLC"), a Delaware limited liability company,
was formed on February 12, 1998 and is a subsidiary of Home Shopping
Network, Inc. ("Home Shopping" or "Holdco"), which is a subsidiary of USA
Networks, Inc. ("USAi"), formerly known as HSN, Inc. At its formation, USAi and
Home Shopping contributed substantially all of the operating assets and
liabilities of Home Shopping to the Company in exchange for Class A LLC Shares
of the Company.

    On July 27, 2000, the Company and Styleclick.com Inc., an enabler of
e-commerce for manaufacturers and retailers, completed the merger of Internet
Shopping Network ("ISN") and Styleclick.com (the "Styleclick Transaction"). The
Styleclick Class A common stock is quoted on the Nasdaq Stock Market under the
symbol "IBUY".

    In March 2001, Styleclick announced a new company organization designed to
advance its offering of scaleable commerce services. The announcement included
Styleclick's acquisition of the MVP.com technology platform. Also in March 2001,
the Styleclick Board elected two executives of ECS to top management positions
at Styleclick, and certain senior executives of Styleclick left the company.

    As a result of the current and anticipated operating losses of Styleclick
and the continuing evaluation of the operations and technology, management
determined the goodwill recorded in conjunction with the Styleclick Merger is
impaired and recorded a write-down of $145.6 million as goodwill amortization as
of December 31, 2000. Management is continuing to evaluate the operations of
Styleclick, which could result in additional write-downs and costs to further
restructure the business to improve results.

    The Company is a holding company, the subsidiaries of which are focused on
the new convergence of entertainment, information and direct selling.

                                       33
<PAGE>
    The five principal areas of business are:

    - CABLE AND STUDIOS, consisting of the cable networks USA Network and Sci Fi
      Channel and Studios USA, which produces and distributes television
      programming.

    - ELECTRONIC RETAILING, consisting primarily of HSN and America's Store, HSN
      International and HSN Interactive, including HSN.com.

    - USA ELECTRONIC COMMERCE SOLUTIONS, which primarily represents the
      Company's electronic commerce solutions business.

    - STYLECLICK, a facilitator of e-commerce websites and Internet enabled
      applications which includes the Company's online retailing networks.

    - EMERGING NETWORKS, consists primarily of the recently acquired cable
      television properties Trio and NewsWorld International, which were
      acquired on May 19, 2000, and SciFi.com. an emerging Internet content and
      commence site.

CONSOLIDATED RESULTS OF OPERATIONS

YEAR ENDED DECEMBER 31, 2000 VS. YEAR ENDED DECEMBER 31, 1999

NET REVENUES

    For the year ended December 31, 2000 revenues increased by $673.7 million,
or 25.1%, to $3.4 billion from $2.7 billion in 1999 primarily due to increases
of $437.2 million, $225.8 million and $19.1 million from the Electronic
retailing, Cable and studios and Emerging networks businesses, respectively,
partially offset by a decrease in the Styleclick business of $6.7 million.

    The increase in Electronic retailing primarily resulted from Home Shopping
Network's core business, which generated increased sales of $152.0 million,
electronic retailing operations in Germany, which generated increased sales of
$224.4 million, HSN.com, which generated increased sales of $39.9 million on
revenues of $41.6 million, and Home Shopping en Espanol, which generated
increased sales $10.3 million. Total units shipped increased to 33.4 million
units compared to 32.0 million units in 1999, and the price point increased to
$48.56 per unit as compared to $45.45 in 1999. Furthermore, the return rate
decreased to 19.9% from 20.3% in 1999. As of January 1, 2000, the Company
presents the operations of HOT Germany on a consolidated basis whereas the
investment was previously accounted for under the equity method of accounting.
Revenues for the German operations were $224.4 million in 2000 as compared to
$166.7 million in 1999.

    USAi has entered into an agreement to transfer 13 owned and operated
full-power television stations to Univision. The agreement with Univision
permits the ten stations that are currently airing HSN to continue to do so
until January 10, 2002.

    Home Shopping Network expects that, before HSN is disaffiliated, it will
have entered into agreements with cable operators in the aforementioned markets
under which the cable operators will transition HSN from broadcast to satellite
feed upon disaffiliation. Agreements with most cable operators have already been
reached, and Home Shopping Network expects that it will reach agreement with the
remaining operators and successfully manage the process of disaffiliation,
although there can be no assurance as to whether or when such agreements will be
reached, or their terms, which could have a negative impact on the financial
operations of Home Shopping Network. HSN customers in these markets who receive
HSN only through over-the-air broadcast television will not be able to receive
HSN unless they subscribe to a cable or satellite service that offers HSN. The
effect of this on HSN's financial results is currently being evaluated. A loss
in sales is expected, which would be partially offset by the elimination of the
costs of operating the television stations being sold. Based on preliminary
estimates, management believes that sales and EBITDA loss at HSN should be in
the range of approximately 6%, a loss that management believes to be
insignificant in relation to the proceeds associated with the Univision
transaction. There is no definitive way, however, to calculate in

                                       34
<PAGE>
advance the sales or EBITDA losses that will be associated with disaffiliation,
and actual sales and EBITDA losses could be higher.

    The increase in Cable and studios primarily resulted from an increase in
advertising revenues at USA Network and a significant increase in advertising
revenues and affiliate revenues at Sci Fi Channel due to an increase in
subscribers and higher ratings and increased affiliate revenues at both
networks. Net revenues at Studios USA increased due primarily to increased
productions for USA Network and the Sci Fi Channel, increased deliveries of
network drama and reality productions, and increased performance of talk shows.
Note that Studios USA defers revenue recognition for internally produced series
for the USA Network and Sci Fi Channel until the product is aired on the
networks.

    Net revenues of Emerging networks increased by $19.1 million to
$20.3 million from $1.2 million for the year ended December 31, 2000 as compared
to 1999 due to the acquisition of Trio and NewsWorld International on May 19,
2000. Prior to this acquisition, the results reflect only SciFi.com.

    Revenue from online retailing networks on the companies auction sites
decreased $12.2 million as compared to 1999 due to the merger of ISN and
Styleclick and the integration of the ISN sites with the Styleclick technology.
Styleclick revenue was $5.6 million for the period subsequent to acquisition.

    In connection with its increased focus on its e-commerce service provider
business, Styleclick has significantly reduced its online retailing networks
business. Accordingly, Styleclick has ceased purchasing inventory for its online
retailing networks business and is in the process of selling its inventory on
hand. Ultimately, Styleclick intends to sell products that are obtained either
on consignment or a drop-ship basis. Such changes will result in substantially
reduced revenues from product sales when compared to historical results. Revenue
from the online retailing networks business was $20.9 million, or approximately
94% of revenue, for the year ended December 31, 2000.

OPERATING COSTS AND EXPENSES

    For the year ended December 31, 2000, total operating costs and expenses
increased $753.0 million, or 32.1%, to $3.1 billion from $2.3 billion compared
to 1999, primarily due to increased costs of $399.5 million, $112.0 million,
$23.3 million and $19.2 million from the Electronic retailing, Cable and
studios, Emerging networks, and Electronic commerce solutions businesses,
respectively, increased depreciation and amortization of $201.3 million,
including $145.6 million recorded at December 31, 2000 related to Styleclick,
and increased amortization of cable distribution fees of $9.6 million. The
increased costs are related to the higher revenue of all of the businesses, the
consolidation of the German electronic retailing operations as of January 1,
2000 and increased start-up costs for emerging businesses. Depreciation and
amortization increased as a result of capital expenditures and acquisitions,
including Styleclick, NWI and Trio. Amortization of cable distribution fees
increased due to higher cost distribution arrangements.

OTHER INCOME (EXPENSE)

    For the year ended December 31, 2000, net interest expense decreased by
$27.2 million, compared to 1999 primarily due to lower borrowing levels as a
result of the repayment of bank debt in prior years from the proceeds of equity
transactions involving Universal Studios Inc. ("Universal") and Liberty Media
Corporation ("Liberty"). In the year ended December 31, 2000, the Company
realized a pre-tax gain of $104.6 million based upon the exchange of 25% of ISN
for 75% of Styleclick.com in the Styleclick Transaction. Also, the Company
realized a pre-tax loss of $35.7 million related to the write-off of investments
to fair value. In the year ended December 31, 1999, the Company realized pre-tax
gains of $89.7 million related to the sale of securities. Furthermore, the
Company recognized other income of $10.4 million from the reversal of equity
losses which were recorded in 1998 as a result of the Universal transaction.

                                       35
<PAGE>
                               MINORITY INTEREST

    Minority interest primarily represents the public's ownership interest in
Styleclick since July 27, 2000 and partners interest in HOT Germany, which the
Company began to consolidate as of January 1, 2000.

                                  INCOME TAXES

    As a limited liability company, the Company is not subject to federal or
state income taxes in the United States, but rather the LLC partners are
responsible for taxes related to the earnings attributable to each partner. The
Company is subject to unincorporated business tax in New York City and income
tax in Germany.

YEAR ENDED DECEMBER 31, 1999 VS. YEAR ENDED DECEMBER 31, 1998

NET REVENUES

    For the year ended December 31, 1999, net revenues increased
$353.6 million, or 15.2%, to $2.7 billion from $2.3 billion compared to 1998
primarily due to increases of $218.9 million and $134.0 million from the Cable
and studios and the Electronic retailing businesses, respectively.

    The increase in Cable and studios revenues primarily resulted from an
increase in advertising revenues due to higher ratings at USA Network and a
significant increase in advertising revenues and affiliate revenues at Sci Fi
Channel. The USA Cable increase was offset by lower revenues at Studios USA due
to fewer deliveries of network product, fewer pilots produced and significantly
increased usage of internally produced series for which revenue recognition is
deferred until aired on USA Network and Sci Fi Channel. The increase in
Electronic retailing revenues primarily resulted from HSN's core business, which
generated increased sales of $115.0 million, including sales increases of
$93.9 million from Home Shopping Network and America's Store and $25.3 million
from continuity services. Furthermore, sales on Home Shopping en Espanol
increased by $5.4 million. Total units shipped increased by 10.8% to
32.0 million units compared to 28.9 million units in 1998. The increase in net
revenues also reflected a decrease in the return rate to 20.3% from 21.0% in
1998.

OPERATING COSTS AND EXPENSES

    For the year ended December 31, 1999, total operating costs and expenses
increased $241.8 million, or 11.5%, to $2.3 billion from $2.1 billion compared
to 1998, primarily due to increased costs of $98.5 million, $74.5 million and
$28.4 million from the Electronic retailing, Cable and studios and Styleclick
businesses, respectively.

    The increase in costs and expenses of Electronic retailing resulted
primarily from higher sales volume and higher merchandising personnel costs.
Also contributing to the increase in costs were international sales and costs
associated with developing the Company's Short Shopping concept. Cable and
studios costs and expenses increased due to the full year impact in 1999 of the
Universal transaction, although the increase was offset by a decrease which
resulted primarily from lower overhead and marketing costs,lower television
production and increased usage of internally developed product. The increase in
costs and expenses of Styleclick resulted primarily from increased costs to
maintain and enhance the Internet services; the costs incurred to develop and
launch FirstJewelry.Com in October 1999 and increased costs of shipping product
as First Auction expanded its product mix.

    Goodwill amortization increased by $16.4 million due to the full year impact
in 1999 of the Universal transaction.

OTHER INCOME (EXPENSE)

    For the year ended December 31, 1999, net interest expense decreased by
$47.1 million, compared to 1998 primarily due to lower borrowing levels as a
result of the repayment of bank debt in the fourth quarter of 1998 and in 1999
from the proceeds of equity transactions involving Universal and Liberty. In
addition, lower interest rates resulted in decreased interest expense.

                                       36
<PAGE>
    In the year ended December 31, 1999, the Company realized gains of
$89.7 million related to the sale of securities and $10.4 million from the
reversal of equity losses which were recorded in 1998 as a result of the
Universal transaction.

                                  INCOME TAXES

    As a limited liability company, the Company is not subject to federal or
state income taxes, but rather the LLC partners are responsible for taxes
related to the earnings attributable to each partner. The Company is subject to
unincorporated business tax in New York City.

              FINANCIAL POSITION, LIQUIDITY AND CAPITAL RESOURCES

    The operating results and capital resources and liquidity requirements of
USAi, Holdco and USANi LLC are dependent on each other. The investment
agreement, among Universal Universal, Liberty, USAi and Holdco requires that no
less frequently than monthly, (1) all cash generated by entities not owned by
USANi LLC be transferred to USANi LLC and (2) any cash needs by entities not
owned by USANi LLC be funded by USANi LLC. In addition, USAi and USANi LLC are
jointly and severally obligated under the $500.0 million 6 3/4% Senior Notes due
2005 (the "Notes"). USANi LLC and its subsidiaries have no material restrictions
on their ability to transfer amounts to fund USAi's operations.

    Net cash provided by operating activities was $360.2 million for the year
ended December 31, 2000 compared to $427.7 million for the year ended
December 31, 1999. These cash proceeds were used to pay for capital expenditures
of $94.8 million, to make principal payments on long-term obligations of
$61.0 million, to make mandatory tax distribution payments to LLC partners of
$118.2 million, including $50.1 million to USAi, and to provide funding to USAi.

    Under the investment agreement, transfers of cash between USAi and USANi LLC
are evidenced by a demand note and accrue interest at USANi LLC's borrowing rate
under the existing credit agreement. Certain transfers of funds between Holdco,
USANi LLC and USAi are not evidenced by a demand note and do not accrue
interest, primarily relating to the establishment of the operations of USANi LLC
and capital contributions from USAi into USANi LLC. During the year ended
December 31, 2000, net transfers from USANi LLC to USAi totaling approximately
$350.4 million, including $70.8 million related to contingent purchase price
payments on the Hotel Reservations Network transaction, $69.2 million to fund
the operations of USAi's television broadcast operations, $50.7 million to fund
the operations and acquisitions of Ticketmaster, $26.9 million to fund the
operations and acquisition of PRC and $32.3 million to pay off outstanding debt
of PRC at the date of acquisition, offset partially by net receipts of
$25.1 million from USA Films. Funds of $129.9 million were also transferred to
USAi to purchase shares of treasury stock.

    On February 12, 1998, USAi and USANi LLC, as borrower, entered into a credit
agreement that provided for a $1.6 billion credit facility. $1.0 billion was
permanently repaid in prior years. The $600.0 million revolving credit facility
expires on December 31, 2002. The existing credit facility is guaranteed by
substantially all of USAi's material subsidiaries. The interest rate on
borrowings under the existing credit facility is tied to an alternate base rate
or the London InterBank Rate, in each case, plus an applicable margin. As of
December 31, 2000, there was $596.3 million available for borrowing after taking
into account outstanding letters of credit.

    Under the investment agreement relating to the Universal transaction, USAi
has granted to Universal and Liberty preemptive rights with respect to future
issuances of USAi's common stock and Class B common stock. These preemptive
rights generally allow Universal and Liberty the right to maintain an ownership
percentage in USAi equal to the ownership percentage that entity held, on a
fully converted basis, immediately prior to the issuance. In May 2000, Liberty
exercised its preemptive right for approximately 7.9 million shares related
principally to the acquisition of PRC, resulting in proceeds of approximately
$179.1 million.

                                       37
<PAGE>
    On July 27, 2000, USAi and Styleclick.com Inc., an enabler of e-commerce for
manufacturers and retailers, completed the merger of Internet Shopping Network
and Styleclick.com. The entities were merged with a new company,
Styleclick, Inc., which owns and operates the combined properties of
Styleclick.com and ISN. Styleclick, Inc. is traded on the Nasdaq market under
the symbol "IBUY". In accordance with the terms of the agreement, USAi invested
$40 million in cash and agreed to contribute $10 million in dedicated media, and
received warrants to purchase additional shares of the new company. At closing,
Styleclick.com repaid the $10 million of borrowing outstanding under a bridge
loan provided by USAi. In conjunction with the transaction, the Company recorded
a pre-tax gain of $104.6 million based upon the 25% of ISN exchanged for 75% of
Styleclick.com.

    In March 2001, Styleclick announced a new company organization designed to
advance its offering of scaleable commerce services. The announcement included
Styleclick's acquisition of the MVP.com technology platform. Also in March 2001,
the Styleclick Board elected two executives of ECS to top management positions
at Styleclick and certain senior executive of Styleclick left the Company.

    As a result of current and anticipated operating losses of Styleclick and
the continuing evaluation of operations and technology, management determined
the goodwill recorded in conjunction with the Styleclick Merger is impaired and
recorded a write-down of $145.6 million as goodwill amortization as of December
31, 2000. Management is continuing to evaluate the operations of Styleclick,
which could result in additional write-downs and costs to further restructure
the business to improve results.

    The Company anticipates that it will need to invest working capital towards
the development and expansion of its overall operations. Due primarily to the
expansion of the Internet and emerging businesses, future capital expenditures
are projected to be higher than current amounts.

    On February 29, 2000, the Company made a mandatory tax distribution payment
to the LLC partners in the amount of $118.2 million, including $50.1 million to
USAi.

    In management's opinion, available cash, internally generated funds and
available borrowings will provide sufficient capital resources to meet the
Company's foreseeable needs.

                                  SEASONALITY

    USANi LLC's businesses are subject to the effects of seasonality. Cable and
studios revenues are influenced by advertiser demand and the seasonal nature of
programming, and generally peak in the spring and fall.

    USANi LLC believes seasonality impacts its Electronic Retailing segment but
not to the same extent it impacts the retail industry in general.

ITEM 7(A). QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

INTEREST RATE RISK

    The Company's exposure to market rate risk for changes in interest rates
relates primarily to the Company's short-term investment portfolio and issuance
of debt. The Company does not use derivative financial instruments in its
investment portfolio. The Company has a prescribed methodology whereby it
invests its excess cash in debt instruments of government agencies and high
quality corporate issuers. To further mitigate risk, the vast majority of the
securities have a maturity date within 60 days. The portfolio is reviewed on a
periodic basis and adjusted in the event that the credit rating of a security
held in the portfolio has deteriorated.

    At December 31, 2000, the Company's outstanding debt approximated
$524.1 million, substantially all of which is fixed rate obligations. If market
rates decline, the Company runs the risk that the related required payments on
the fixed rate debt will exceed those based on the current market rate.

FOREIGN CURRENCY EXCHANGE RISK

    The Company conducts business in certain foreign markets. However, the level
of operations in foreign markets is insignificant to the consolidated results.

EQUITY PRICE RISK

    The Company has no investments in equity securities of publicly-traded
companies. It is not customary for the Company to make investments in equity
securities as part of its investment strategy.

                                       38
<PAGE>
                         REPORT OF INDEPENDENT AUDITORS

The Members of USANi LLC

    We have audited the accompanying consolidated balance sheets of USANi LLC
and subsidiaries as of December 31, 2000 and 1999, and the related consolidated
statements of operations, members' equity and cash flows for each of the three
years in the period ended December 31, 2000. Our audits also included the
financial statement schedule listed in the Index at Item 14(a). These financial
statements and the related financial statement schedule are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these financial statements and the financial statement schedule based on our
audits.

    We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

    In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
USANi LLC and subsidiaries at December 31, 2000 and 1999, and the consolidated
results of its operations and its cash flows for each of the three years in the
period ended December 31, 2000, in conformity with accounting principles
generally accepted in the United States. Also, in our opinion, the related
financial statement schedule, when considered in relation to the basic
consolidated financial statements taken as a whole, presents fairly in all
material respects the information set forth therein.

                                          /s/ ERNST & YOUNG LLP

New York, New York
February 1, 2001, except for Note 3
as to which the date is
March 22, 2001

                                       39
<PAGE>
ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

                           USANI LLC AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                                 YEARS ENDED DECEMBER 31,
                                                           ------------------------------------
                                                              2000         1999         1998
                                                           ----------   ----------   ----------
<S>                                                        <C>          <C>          <C>
NET REVENUES
  Cable and studios......................................  $1,530,464   $1,304,683   $1,085,685
  Electronic retailing...................................   1,778,986    1,341,828    1,207,867
  Styleclick.............................................      22,308       28,962       23,969
  Electronic commerce solutions..........................       8,042        2,924          809
  Emerging networks......................................      20,332        1,188           --
  Other..................................................          --        6,894       14,495
                                                           ----------   ----------   ----------
    Total net revenues...................................   3,360,132    2,686,479    2,332,825
Operating costs and expenses:
  Cost of sales..........................................   1,184,729      905,342      810,004
  Program costs..........................................     684,992      630,956      592,095
  Selling and marketing..................................     383,722      277,257      264,937
  General and administrative.............................     299,844      237,317      172,419
  Other operating costs..................................     129,458       89,793       87,014
  Amortization of cable distribution fees................      36,322       26,680       22,089
  Depreciation and amortization..........................     376,791      175,539      152,537
                                                           ----------   ----------   ----------
    Total operating costs and expenses...................   3,095,858    2,342,884    2,101,095
                                                           ----------   ----------   ----------
    Operating profit.....................................     264,274      343,595      231,730
Other income (expense):
  Interest income........................................      14,671       37,573       19,745
  Interest expense.......................................     (22,994)     (73,106)    (102,377)
  Gain on sale of securities.............................          --       89,721           --
  Gain on sale of subsidiary stock.......................     104,625           --           --
  Other, net.............................................     (45,859)       2,103      (19,077)
                                                           ----------   ----------   ----------
                                                               50,443       56,291     (101,709)
                                                           ----------   ----------   ----------
Earnings before income taxes and minority interest.......     314,717      399,886      130,021
Income tax expense.......................................     (26,437)      (5,501)      (5,367)
Minority interest........................................      41,597          603          881
                                                           ----------   ----------   ----------
NET EARNINGS.............................................  $  329,877   $  394,988   $  125,535
                                                           ==========   ==========   ==========
</TABLE>

The accompanying Notes to Consolidated Financial Statements are an integral part
                              of these statements.

                                       40
<PAGE>
                           USANI LLC AND SUBSIDIARIES
                          CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                              DECEMBER 31,   DECEMBER 31,
                                                                  2000           1999
                                                              ------------   ------------
                                                                    (IN THOUSANDS)
<S>                                                           <C>            <C>
                                  ASSETS
CURRENT ASSETS
Cash and cash equivalents...................................   $   71,816     $  247,474
Accounts and notes receivable, net of allowance of $50,646
  and $33,317, respectively.................................      519,365        381,175
Inventories, net............................................      603,762        432,520
Investments held for sale...................................          750             --
Other current assets, net...................................       18,024          8,542
                                                               ----------     ----------
  Total current assets......................................    1,213,717      1,069,711
PROPERTY, PLANT AND EQUIPMENT
Computer and broadcast equipment............................      143,559        123,606
Buildings and leasehold improvements........................       71,979         59,074
Furniture and other equipment...............................       76,623         67,246
Land........................................................       10,281         10,246
Projects in progress........................................       32,747         31,736
                                                               ----------     ----------
                                                                  335,189        291,908
  Less accumulated depreciation and amortization............      (83,549)       (79,350)
                                                               ----------     ----------
                                                                  251,640        212,558
OTHER ASSETS
Intangible assets, net......................................    5,099,476      5,105,510
Cable distribution fees, net................................      159,473        130,988
Long-term investments.......................................       29,187         93,742
Notes and accounts receivable, net ($22,575 and $2,562,
  respectively, from related parties).......................       33,571         19,506
Inventories, net............................................      222,976        154,497
Advances to USAI and subsidiaries...........................      918,817        649,480
Deferred charges and other, net.............................       44,011         36,934
                                                               ----------     ----------
                                                               $7,972,868     $7,472,926
                                                               ==========     ==========
                     LIABILITIES AND MEMBERS' EQUITY
CURRENT LIABILITIES
Current maturities of long-term obligations.................   $   20,053     $    3,758
Accounts payable, trade.....................................      201,484        147,864
Obligations for program rights and film costs...............      283,812        265,235
Cable distribution fees payable.............................       33,598         43,993
Deferred revenue............................................       41,335         47,536
Other accrued liabilities...................................      342,995        257,575
                                                               ----------     ----------
Total current liabilities...................................      923,277        765,961
LONG-TERM OBLIGATIONS (NET OF CURRENT MATURITIES)...........      504,063        527,339
OBLIGATIONS FOR PROGRAM RIGHTS AND FILM COSTS, net of
  current...................................................      295,210        256,260
OTHER LONG-TERM LIABILITIES.................................       81,925         81,156
MINORITY INTEREST...........................................       28,662            531
COMMITMENTS AND CONTINGENCIES...............................           --             --
MEMBERS' EQUITY
Class A (252,679,887 and 245,601,782 shares,
  respectively).............................................    2,007,736      1,912,514
Class B (282,161,532 shares)................................    2,978,635      2,978,635
Class C (45,774,708 shares).................................      466,252        466,252
Retained earnings...........................................      695,986        484,278
Accumulated other comprehensive income......................       (8,878)            --
                                                               ----------     ----------
  Total members' equity.....................................    6,139,731      5,841,679
                                                               ----------     ----------
                                                               $7,972,868     $7,472,926
                                                               ==========     ==========
</TABLE>

The accompanying Notes to Consolidated Financial Statements are an integral part
                              of these statements.

                                       41
<PAGE>
                           USANI LLC AND SUBSIDIARIES
                   CONSOLIDATED STATEMENTS OF MEMBERS' EQUITY

<TABLE>
<CAPTION>
                                                                                                    ACCUMULATED
                                                                                                       OTHER
                                          CLASS A LLC    CLASS B LLC    CLASS C LLC    RETAINED    COMPREHENSIVE      UNEARNED
                               TOTAL         SHARES         SHARES         SHARES      EARNINGS        INCOME       COMPENSATION
                             ----------   ------------   ------------   ------------   ---------   --------------   -------------
                                                                        (IN THOUSANDS)
<S>                          <C>          <C>            <C>            <C>            <C>         <C>              <C>
BALANCE AT DECEMBER 31,
  1997.....................  $1,408,362    $1,393,425     $       --     $       --    $  16,510      $     --         $(1,573)
Comprehensive income:
  Net earnings for the year
    ended December 31,
    1998...................     125,535            --             --             --      125,535            --              --
  Increase in unrealized
    gains in available for
    sale securities........      17,850            --             --             --           --        17,850              --
                             ----------
  Comprehensive income.....     143,385            --             --             --           --            --              --
  Distribution of net
    deferred tax assets to
    USAi on February 12,
    1998...................     (46,765)      (46,765)            --             --           --            --              --
  LLS shares issued on
    February 12, 1998 in
    connection with the
    Universal
    Transaction............   2,514,548       277,898      2,236,650             --           --            --              --
  Other LLC Shares
    Issued.................   1,095,025        93,949        534,824        466,252           --            --              --
  Exchange of Class B LLC
    Shares for Class A LLC
    Shares (See Note 9)....          --        35,111        (35,111)            --           --            --              --
  Amortization of unearned
    compensation related to
    stock options and
    equity participation
    plans..................         850            --             --             --           --            --             850
                             ----------    ----------     ----------     ----------    ---------      --------         -------
BALANCE AT DECEMBER 31,
  1998.....................  $5,115,405    $1,753,618     $2,736,363     $  466,252    $ 142,045      $ 17,850            (723)
                             ----------    ----------     ----------     ----------    ---------      --------         -------
Comprehensive income:
  Net earnings for the year
    ended December 31,
    1999...................     394,988            --             --             --      394,988            --              --
  Decrease in unrealized
    gains in available for
    sale securities........     (17,850)           --             --             --           --       (17,850)             --
                             ----------
  Comprehensive income.....     377,138            --             --             --           --            --              --
  Issuance of LLC shares...     410,545       168,273        242,272             --           --            --              --
  Repurchase of LLC
    shares.................      (8,934)       (8,934)            --             --           --            --              --
  Mandatory tax
    distribution to LLC
    partners...............     (52,755)           --             --             --      (52,755)           --              --
  Cancellation of employee
    equity program.........         280          (443)            --             --           --            --             723
                             ----------    ----------     ----------     ----------    ---------      --------         -------
BALANCE AT DECEMBER 31,
  1999.....................  $5,841,679    $1,912,514     $2,978,635     $  466,252    $ 484,278      $     --         $    --
Comprehensive income:
  Net earnings for the year
    ended December 31,
    2000...................     329,877            --             --             --      329,877            --              --
  Decrease in unrealized
    gains in available for
    sale securities........      (9,291)           --             --             --           --        (9,291)             --
  Foreign currency
    translation............         413            --             --                                       413
                             ----------
Comprehensive income.......     320,999            --             --             --           --            --              --
Issuance of LLC shares.....     225,129       225,129             --             --           --            --              --
Repurchase of LLC shares...    (129,907)     (129,907)            --             --           --            --              --
Mandatory tax distribution
  to LLC partners..........    (118,169)           --             --             --     (118,169)           --              --
                             ----------    ----------     ----------     ----------    ---------      --------         -------
BALANCE AT DECEMBER 31,
  2000.....................  $6,139,731    $2,007,736     $2,978,635     $  466,252    $ 695,986      ($ 8,878)        $    --
                             ==========    ==========     ==========     ==========    =========      ========         =======
</TABLE>

    Accumulated other comprehensive income is comprised of unrealized (losses)
gains on available for sale securities of $(9,291) and $17,850 for December 31,
2000 and 1998, respectively and foreign currency translation adjustments of $413
for December 31, 2000. There were no foreign currency translation adjustments
for December 31, 1999 and 1998.

The accompanying Notes to Consolidated Financial Statements are an integral part
                              of these statements.

                                       42
<PAGE>
                           USANI LLC AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                2000        1999         1998
                                                              ---------   ---------   -----------
                                                                        (IN THOUSANDS)
<S>                                                           <C>         <C>         <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net earnings..............................................  $ 329,877   $ 394,988   $   125,535
ADJUSTMENTS TO RECONCILE NET EARNINGS (LOSS) TO NET CASH
  PROVIDED BY OPERATING ACTIVITIES:
  Depreciation and amortization.............................    376,791     175,539       152,537
  Amortization of cable distribution fees...................     36,322      26,680        22,089
  Amortization of program rights and film costs.............    597,659     532,900       509,397
  Gain on sale of subsidiary stock..........................   (104,625)         --            --
  Gain on sale of securities................................         --     (89,721)           --
  Amortization of deferred financing costs..................      2,457       5,035         5,423
  Equity in (earnings) losses of unconsolidated
    affiliates..............................................     46,025      (1,866)       18,238
  Minority interest.........................................    (41,597)       (603)         (881)
CHANGES IN CURRENT ASSETS AND LIABILITIES:
  Accounts receivable.......................................   (105,835)    (33,879)     (115,955)
  Inventories...............................................    (44,687)    (16,805)     (136,160)
  Accounts payable..........................................     34,425     (11,233)       75,058
  Accrued liabilities and deferred revenue..................     41,136      28,738        92,932
  Payment for program rights and film costs.................   (739,066)   (555,383)     (426,949)
  Increase in cable distribution fees.......................    (64,876)    (42,887)      (11,338)
  Other, net................................................     (3,767)     16,195       (31,652)
                                                              ---------   ---------   -----------
    NET CASH PROVIDED BY OPERATING ACTIVITIES...............    360,239     427,698       278,274
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition, Universal Transaction, net of cash acquired....         --          --    (1,297,233)
Acquisitions, net of cash acquired..........................   (110,780)     (7,500)           --
Capital expenditures........................................    (94,826)    (70,681)      (52,085)
Increase in long-term investments and notes receivable......    (40,220)    (54,478)      (23,226)
Proceeds from sale of securities............................      2,194     107,231            --
Payment of merger and financing costs.......................         --          --       (24,105)
Other, net..................................................     (2,168)      8,654        (3,910)
                                                              ---------   ---------   -----------
    NET CASH USED IN INVESTING ACTIVITIES...................   (245,800)    (16,774)   (1,400,559)
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings..................................................     64,611          --     1,641,380
Net proceeds from issuance of Senior Notes..................         --          --       494,350
Payment of mandatory tax distribution to LLC partners.......   (118,169)    (52,755)           --
Principal payments on long-term obligations.................    (60,981)   (253,224)   (1,491,484)
Repurchase of LLC shares....................................   (129,907)     (8,934)           --
Proceeds from issuance of LLC shares........................    210,455     410,545       795,025
Advances to USAi and subsidiaries...........................   (246,775)   (493,985)     (105,105)
Other.......................................................    (10,531)         --            --
                                                              ---------   ---------   -----------
    NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES.....   (291,297)   (398,353)    1,334,166
Effect of exchange rate changes on cash and cash
  equivalents...............................................      1,200          --            --
                                                              ---------   ---------   -----------
NET DECREASE IN CASH AND CASH EQUIVALENTS...................   (175,658)     12,571       211,881
Cash and cash equivalents at beginning of period............    247,474     234,903        23,022
                                                              ---------   ---------   -----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD..................  $  71,816   $ 247,474   $   234,903
                                                              =========   =========   ===========
</TABLE>

The accompanying Notes to Consolidated Financial Statements are an integral part
                              of these statements.

                                       43
<PAGE>
                           USANI LLC AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1--COMPANY FORMATION, BUSINESS AND BASIS OF PRESENTATION

COMPANY FORMATION

    USANi LLC (the "Company" or "LLC"), a Delaware limited liability company,
was formed on February 12, 1998 and is a subsidiary of Home Shopping
Network, Inc. ("Home Shopping" or "Holdco"), which is a subsidiary of USA
Networks, Inc. ("USAi"), formerly known as HSN, Inc. At its formation, USAi and
Home Shopping contributed substantially all of the operating assets and
liabilities of Home Shopping to the Company in exchange for Class A LLC Shares
of the Company.

    On February 12, 1998, the Company acquired USA USA Cable, a New York general
partnership, consisting of cable television networks, USA Network and Sci Fi
Channel ("USA Cable"), as well as the domestic television production and
distribution businesses of Universal Studios ("Studios USA") from Universal
Studios, Inc. ("Universal"), an entity controlled by Vivendi Universal, S.A., a
French corporation ("Vivendi"), as a result of the combination of Vivendi, The
Seagram Company Ltd. ("Seagram") and Canal Plus completed in December 2000.

    On January 20, 2000, the Board of Directors declared a two-for-one stock
split of USANi LLC's members' equity interests, payable in the form of a
dividend to shareholders of record as of the close of business on February 10,
2000. The stock dividend was paid on February 24, 2000. All share numbers give
effect to such stock split.

    On July 27, 2000, the Company and Styleclick.com Inc., an enabler of
e-commerce for manufacturers and retailers ("Styleclick.com"), completed the
merger of Internet Shopping Network ("ISN") and Styleclick.com (the "Styleclick
Transaction"). See Note 3.

COMPANY BUSINESS

    The Company is a holding company, the subsidiaries of which are focused on
the new convergence of entertainment, information and direct selling.

    The five principal areas of business are:

    - CABLE AND STUDIOS, consisting of the cable networks USA Network and Sci Fi
      Channel and Studios USA, which produces and distributes television
      programming.

    - ELECTRONIC RETAILING, consisting primarily of HSN and America's Store, HSN
      International and HSN Interactive, including HSN.com.

    - USA ELECTRONIC COMMERCE SOLUTIONS, which primarily represents the
      Company's electronic commerce solutions business.

    - STYLECLICK, a facilitator of e-commerce websites and Internet enabled
      applications which includes the Company's online retailing networks.

    - EMERGING NETWORKS, consists primarily of the recently acquired cable
      television properties Trio and News World International, which were
      acquired on May 19, 2000, and SciFi.com. an emerging Internet content and
      commence site.

BASIS OF PRESENTATION

    The contribution of assets by USAi and Home Shopping to the Company was
accounted for in the accompanying consolidated financial statements in a manner
similar to the pooling-of-interests for

                                       44
<PAGE>
                           USANI LLC AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

business combinations due to the common ownership of Home Shopping and USANi
LLC. Accordingly, the assets and liabilities were transferred to the LLC at Home
Shopping's historical cost.

    Given that equity interests in limited liability companies are not in the
form of common stock, earnings per share data is not presented.

NOTE 2--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

CONSOLIDATION

    The consolidated financial statements include the accounts of the Company
and all wholly-owned and voting-controlled subsidiaries. Significant
intercompany transactions and accounts have been eliminated.

    Investments in which the Company owns a 20%, but not in excess of 50%,
interest and where it can exercise significant influence over the operations of
the investee, are accounted for using the equity method. All other investments
are accounted for using the cost method. The Company periodically evaluates the
recoverability of investments recorded under the cost method and recognizes
losses if a decline in value is determined to be other than temporary.

REVENUES

CABLE AND STUDIOS

    Television production revenues are recognized as completed episodes are
delivered. Generally, television programs are first licensed for network
exhibition and foreign syndication, and subsequently for domestic syndication,
cable television and home video. Certain television programs are produced and/or
distributed directly for initial exhibition by local television stations,
advertiser-supported cable television, pay television and/or home video.
Television production advertising revenues (i.e., sales of advertising time
received by Studios USA in lieu of cash fees for the licensing of program
broadcast rights to a broadcast station ("barter syndication")) are recognized
upon both the commencement of the license period of the program and the sale of
advertising time pursuant to non-cancelable agreements, provided that the
program is available for its first broadcast. Foreign minimum guaranteed amounts
are recognized as revenues on the commencement date of the license agreement,
provided the program is available for exhibition.

    USA Cable advertising revenue is recognized in the period in which the
advertising commercials are aired on cable networks. Provisions are recorded
against advertising revenues for audience under deliveries ("makegoods").
Affiliate fees are recognized in the period during which the programming is
provided.

ELECTRONIC RETAILING

    Revenues from electronic retailing primarily consist of merchandise sales
and are reduced by incentive discounts and sales returns to arrive at net sales.
Revenues are recorded for credit card sales upon transaction authorization, and
for check sales upon receipt of customer payment, which does not vary
significantly from the time goods are shipped. Home Shopping's sales policy
allows merchandise to be returned at the customer's discretion within 30 days of
the date of delivery. Allowances for returned merchandise and other adjustments
are provided based upon past experience.

                                       45
<PAGE>
                           USANI LLC AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

PROGRAM RIGHTS

    License agreements for program material are accounted for as a purchase of
program rights. The asset related to the program rights acquired and the
liability for the obligation incurred are recorded at their net present value
when the license period begins and the program is available for its initial
broadcast. The asset is amortized primarily based on the estimated number of
airings. Amortization is computed generally on the straight-line basis as
programs air; however, when management estimates that the first airing of a
program has more value than subsequent airings, an accelerated method of
amortization is used. Other costs related to programming, which include program
assembly, commercial integration and other costs, are expensed as incurred.
Management periodically reviews the carrying value of program rights and records
write-offs, as warranted, based on changes in programming usage.

MERCHANDISE INVENTORIES, NET

    Merchandise inventories are valued at the lower of cost or market, cost
being determined using the first-in, first-out method. Cost includes freight,
certain warehouse costs and other allocable overhead. Market is determined on
the basis of net realizable value, giving consideration to obsolescence and
other factors. Merchandise inventories are presented net of an inventory
carrying adjustment of $37.9 million and $29.1 million at December 31, 2000 and
1999, respectively.

CASH AND CASH EQUIVALENTS

    Cash and cash equivalents include cash and short-term investments.
Short-term investments consist primarily of U.S. Treasury Securities, U.S.
Government agencies and certificates of deposit with original maturities of less
than 91 days.

PROPERTY, PLANT AND EQUIPMENT

    Property, plant and equipment, including significant improvements, are
recorded at cost. Repairs and maintenance and any gains or losses on
dispositions are included in operations.

    Depreciation and amortization is provided for on a straight-line basis to
allocate the cost of depreciable assets to operations over their estimated
service lives.

<TABLE>
<CAPTION>
ASSET CATEGORY                                      DEPRECIATION/AMORTIZATION PERIOD
--------------                                      --------------------------------
<S>                                                 <C>
Computer and broadcast equipment..................  3 to 13 Years
Buildings.........................................  30 to 40 Years
Leasehold improvements............................  4 to 20 Years
Furniture and other equipment.....................  3 to 10 Years
</TABLE>

    Depreciation and amortization expense on property, plant and equipment was
$65.2 million, $41.0 million and $35.0 million for the years ended December 31,
2000, 1999 and 1998, respectively.

LONG-LIVED ASSETS INCLUDING INTANGIBLES

    The Company's accounting policy regarding the assessment of the
recoverability of the carrying value of long-lived assets, including goodwill
and other intangibles and property, plant and equipment, is to review the
carrying value of the assets if the facts and circumstances suggest that they
may be impaired. If this review indicates that the carrying value will not be
recoverable, as determined based on the projected undiscounted future cash
flows, the carrying value is reduced to its estimated fair value.

                                       46
<PAGE>
                           USANI LLC AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

CABLE DISTRIBUTION FEES

    Cable distribution fees relate to upfront fees paid in connection with
multi-year cable contracts for carriage of Home Shopping's programming. These
fees are amortized to expense on a straight line basis over the terms of the
respective contracts.

ADVERTISING

    Advertising costs are primarily expensed in the period incurred. Advertising
expense for the years ended December 31, 2000, 1999 and 1998 were
$127.5 million, $95.5 million and $88.8 million, respectively.

STOCK-BASED COMPENSATION

    The Company accounts for stock-based compensation in accordance with APB 25,
ACCOUNTING FOR STOCK ISSUED TO EMPLOYEES. In cases where exercise prices are
less than fair value as of the grant date, compensation is recognized over the
vesting period.

MINORITY INTEREST

    Minority interest represents the ownership interests of third parties in the
net assets and results of operations of certain consolidated subsidiaries.

ACCOUNTING ESTIMATES

    Management of the Company is required to make certain estimates and
assumptions during the preparation of consolidated financial statements in
accordance with generally accepted accounting principles. These estimates and
assumptions impact the reported amount of assets and liabilities and disclosures
of contingent assets and liabilities as of the date of the consolidated
financial statements. They also impact the reported amount of net earnings
during any period. Actual results could differ from those estimates.

    Significant estimates underlying the accompanying consolidated financial
statements include the inventory carrying adjustment, program rights and film
cost amortization, sales return and other revenue allowances, allowance for
doubtful accounts, recoverability of intangibles and other long-lived assets,
estimates of film revenue ultimates and various other operating allowances and
accruals.

NEW ACCOUNTING PRONOUNCEMENTS

    In June 2000, the Accounting Standards Executive Committee ("AcSEC") issued
SOP 00-2, ACCOUNTING BY PRODUCERS OR DISTRIBUTORS OF FILMS ("SOP 00-2"), which
replaces FASB Statement No. 53, FINANCIAL ACCOUNTING BY PRODUCERS AND
DISTRIBUTORS OF MOTION PICTURE FILMS. The AcSEC concluded that film costs would
be accounted for under an inventory model. In addition, the SOP addresses such
topics as revenue recognition (fixed fees and minimum guarantees in variable fee
arrangements), fee allocation in multiple films, accounting for exploitation
costs, and impairment assessment. The SOP is effective for financial statements
issued for fiscal years beginning after December 15, 2000.

                                       47
<PAGE>
                           USANI LLC AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

    The Company is currently evaluating the impact of SOP 00-2, although the
impact is not expected to be material.

RECLASSIFICATIONS

    Certain amounts in the prior years' consolidated financial statements have
been reclassified to conform to the 2000 presentation, including all amounts
charged to customers for shipping and handling, which are now presented as
revenue.

NOTE 3--BUSINESS ACQUISITIONS

STYLECLICK TRANSACTION

    On July 27, 2000, USAi and Styleclick.com Inc., an enabler of e-commerce for
manufacturers and retailers, completed the merger of Internet Shopping Network
and Styleclick.com. The entities were merged with a new company,
Styleclick, Inc., which owns and operates the combined properties of
Styleclick.com and ISN. Styleclick, Inc. is traded on the Nasdaq market under
the symbol "IBUY". In accordance with the terms of the agreement, USAi invested
$40 million in cash and agreed to contribute $10 million in dedicated media, and
received warrants to purchase additional shares of the new company. At closing,
Styleclick.com repaid the $10 million of borrowing outstanding under a bridge
loan made by USAi.

    The aggregate purchase price, including transaction costs, of
$211.9 million was determined as follows:

<TABLE>
<CAPTION>
                                                              (IN THOUSANDS)
                                                              --------------
<S>                                                           <C>
Value of portion of Styleclick.com acquired in the merger...     $121,781
Additional cash and promotional investment by USAi..........       50,000
Fair value of outstanding "in the money options" and
  warrants of Styleclick.com................................       37,989
Transaction costs...........................................        2,144
                                                                 --------
Total acquisition costs.....................................     $211,914
                                                                 ========
</TABLE>

    The fair value of Styleclick.com was based on the fair value of $15.78 per
share times 7.7 million shares outstanding. Fair value of the shares was
determined by taking an average of the opening and closing price of
Styleclick.com common stock for the period just before and just after the terms
of the transaction were agreed to by the Company and Styleclick.com and
announced to the public. In conjunction with the transaction, the Company
recorded a pre-tax gain of $104.6 million based upon the 25% of ISN exchanged
for 75% of Styleclick.com.

    The Styleclick transaction has been accounted for under the purchase method
of accounting. The purchase price has been preliminarily allocated to the assets
acquired and liabilities assumed based on their respective fair values at the
date of purchase. The unallocated excess of acquisition costs over net

                                       48
<PAGE>
                           USANI LLC AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

assets acquired of $170.2 million has been allocated to goodwill, which is being
amortized over 3 years. Assets and liabilities as of the acquisition date
consist of the following:

<TABLE>
<CAPTION>
                                                              (IN THOUSANDS)
                                                              --------------
<S>                                                           <C>
Current assets..............................................     $39,992
Non-current assets..........................................       4,400
Goodwill....................................................     170,238
Current liabilities.........................................       2,716
</TABLE>

    In March 2001, Styleclick announced a new company organization designed to
advance its offering of scaleable commerce services. The announcement included
Styleclick's acquisition of the MVP.com technology platform. Also in March 2001,
the Styleclick Board elected two executives of ECS to top management positions
at Styleclick and certain senior executives of Styleclick left the company.

    As a result of the current and anticipated operating losses of Styleclick,
and the continuing evaluation of the operations and technology, management
determined the goodwill recorded in conjunction with the Styleclick Merger is
impaired and recorded a write-down of $145.6 million as goodwill amortization as
of December 31, 2000. Management is continuing to evaluate the operations of
Styleclick, which could result in additional write-downs and costs to further
restructure the business to improve results.

    The following unaudited pro forma condensed consolidated financial
information for the twelve months ended December 31, 2000 and 1999 is presented
to show the results of the Company as if the Styleclick Transaction had occurred
on January 1, 1999. The pro forma results reflect certain adjustments, including
increased amortization related to goodwill and other intangibles, and are not
necessarily indicative of what the results would have been had the transactions
actually occurred on January 1, 1999.

<TABLE>
<CAPTION>
                                                  YEAR ENDED           YEAR ENDED
                                              DECEMBER 31, 2000    DECEMBER 31, 1999
                                              ------------------   ------------------
<S>                                           <C>                  <C>
Net revenues................................      $3,362,021           $2,692,653
Net income..................................         321,026              351,630
</TABLE>

NOTE 4--INTANGIBLE ASSETS

    Intangible assets represents goodwill which is amortized using the
straight-line method over periods ranging from 3 to 40 years.

    Goodwill primarily relates to various transactions, and represents the
excess of purchase price over the fair value of assets acquired and is net of
accumulated amortization of $453.6 million and $284.7 million at December 31,
2000 and 1999, respectively.

                                       49
<PAGE>
                           USANI LLC AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 5--LONG-TERM OBLIGATIONS

<TABLE>
<CAPTION>
                                                                 DECEMBER 31,
                                                              -------------------
                                                                2000       1999
                                                              --------   --------
                                                                (IN THOUSANDS)
<S>                                                           <C>        <C>
Unsecured Senior Credit Facility ("New Facility"); with a
  $40,000,000 sub-limit for letters of credit, entered into
  February 12, 1998, which matures on December 31, 2002. At
  the Company's option, the interest rate on borrowings is
  tied to the London Interbank Offered Rate ("LIBOR") or the
  Alternate Base Rate ("ABR"), plus an applicable margin.
  Interest rate at December 31, 2000 was 6.5%...............  $     --   $     --
$500,000,000 6 3/4% Senior Notes (the "Senior Notes") due
  November 15, 2005; interest payable May 15 and November 15
  commencing May 15, 1999. Interest rate at December 31,
  2000 was 6.84%............................................   498,213    497,914
Other long-term obligations maturing through 2007...........    25,903     33,183
                                                              --------   --------
Total long-term obligations.................................   524,116    531,097
Less current maturities.....................................   (20,053)    (3,758)
                                                              --------   --------
Long-term obligations, net of current maturities............  $504,063   $527,339
                                                              ========   ========
</TABLE>

    On February 12, 1998, USAi and USANi LLC, as borrower, entered into a credit
agreement which provides for a $1.6 billion credit facility. The credit facility
was used to finance the Universal Transaction and to refinance USAi's
then-existing $275.0 million revolving credit facility. The credit facility
consists of (1) a $600.0 million revolving credit facility with a $40.0 million
sub-limit for letters of credit, (2) a $750.0 million Tranche A Term Loan and,
(3) a $250.0 million Tranche B Term Loan. The Tranche A Term Loan and the
Tranche B Term Loan have been permanently repaid as of December 31, 1999, as
described below. The revolving credit facility expires on December 31, 2002.

    On November 23, 1998, USAi and USANi LLC completed an offering of
$500.0 million 6 3/4% Senior Notes due 2005 (the "Notes"). Proceeds received
from the sale of the Notes together with available cash were used to repay and
permanently reduce $500.0 million of the Tranche A Term Loan. On August 5, 1998,
USANi LLC permanently repaid the Tranche B Term Loan in the amount of
$250.0 million from cash on hand. In 1999 the Company permanently repaid the
Tranche A Term Loan in the amount of $250.0 million from cash on hand.

    The existing credit facility is guaranteed by certain of USAi's material
subsidiaries. The interest rate on borrowings under the existing credit facility
is tied to an alternate base rate or the London InterBank Rate, in each case,
plus an applicable margin, and $596.3 million was available for borrowing as of
December 31, 2000 after taking into account outstanding letters of credit. The
credit facility includes covenants requiring, among other things, maintenance of
specific operating and financial ratios and places restrictions on payments of
dividends, incurrence of indebtedness and investments. The Company pays a
commitment fee of .1875% on the unused portion of the credit facility.

                                       50
<PAGE>
                           USANI LLC AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

    Aggregate contractual maturities of long-term obligations are as follows:

<TABLE>
<CAPTION>
YEARS ENDING DECEMBER 31,                                     (IN THOUSANDS)
-------------------------                                     --------------
<S>                                                           <C>
2001........................................................     $ 20,053
2002........................................................        4,841
2003........................................................          387
2004........................................................            8
2005........................................................      498,823
Thereafter..................................................            4
                                                                 --------
                                                                 $524,116
                                                                 ========
</TABLE>

NOTE 6--INCOME TAXES

    The Company was formed as a limited liability company on February 12, 1998
and is treated as a partnership for income tax purposes. As such, the individual
LLC members are subject to federal and state taxes based on their allocated
portion of income and expenses and the Company is not subject to Federal and
state income taxation. However, for the period January 1, 1998 to February 11,
1998, the Company and its predecessor were subject to Federal and state
taxation. The Company is subject to taxes in Germany and New York unincorporated
business tax.

    The Company has Federal income tax returns under examination by the Internal
Revenue Service. The Company has received proposed adjustments related to
certain examinations. Management believes that the resolution of the proposed
adjustments will not have a material adverse effect on the Company's
consolidated financial statements.

NOTE 7--COMMITMENTS AND CONTINGENCIES

    The Company leases satellite transponders, computers, warehouse and office
space, as well as broadcast and production facilities, equipment and services
used in connection with its operations under various operating leases and
contracts, many of which contain escalation clauses.

    Future minimum payments under non-cancellable agreements are as follows:

<TABLE>
<CAPTION>
YEARS ENDING DECEMBER 31,                                     (IN THOUSANDS)
-------------------------                                     --------------
<S>                                                           <C>
2001........................................................     $ 60,928
2002........................................................       51,704
2003........................................................       32,217
2004........................................................       28,947
2005........................................................       20,618
Thereafter..................................................       38,356
                                                                 --------
                                                                 $232,770
                                                                 ========
</TABLE>

    Expenses charged to operations under these agreements were $56.4 million,
$46.1 million and $45.9 million for the years ended December 31, 2000, 1999 and
1998, respectively.

    The Company is required to provide funding, from time to time, for the
operations of its investments in joint ventures accounted for under the equity
method.

                                       51
<PAGE>
                           USANI LLC AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 8-INVENTORIES

<TABLE>
<CAPTION>
                                                         DECEMBER 31,            DECEMBER 31,
                                                             2000                    1999
                                                     ---------------------   ---------------------
                                                     CURRENT    NONCURRENT   CURRENT    NONCURRENT
                                                     --------   ----------   --------   ----------
                                                                    (IN THOUSANDS)
<S>                                                  <C>        <C>          <C>        <C>
Film costs:
Released, net of amortization......................  $175,272    $ 41,384    $ 76,183    $ 63,347
In process and unreleased..........................    31,967       2,746      38,366       2,378
Programming costs, net of amortization.............   172,493     178,846     149,959      88,772
Sales merchandise, net.............................   224,030          --     168,012          --
                                                     --------    --------    --------    --------
Total..............................................  $603,762    $222,976    $432,520    $154,497
                                                     ========    ========    ========    ========
</TABLE>

    The Company estimates that approximately 90% of unamortized film costs at
December 31, 2000 will be amortized within the next three years.

NOTE 9--MEMBERS' EQUITY

    On January 20, 2000, the Board of Directors declared a two-for-one stock
split of USANi LLC's members' equity interests, payable in the form of a
dividend to shareholders of record as of the close of business on February 10,
2000. The 100% stock dividend was paid on February 24, 2000. All share numbers
give effect to such stock split.

    In connection with the Universal Transaction, the Company was formed through
the authorization and issuance of three classes of shares, Class A LLC Shares,
Class B LLC Shares and Class C LLC Shares. In return for LLC Shares (i) USAi
(and certain of its subsidiaries) contributed its assets and liabilities related
to its Electronic retailing and Internet services businesses and (ii) Universal
(and certain of its subsidiaries) contributed USA Cable and Studios USA. On
June 30, 1998, and in connection with the Universal Transaction, Liberty
purchased 30,000,000 Class C LLC Shares for $308.5 million. USAi, Home Shopping,
Universal and Liberty (and their respective subsidiaries) are collectively
referred to herein as the "Members".

    In connection with various equity transactions at USAi in 1998, Universal
completed its mandatory purchase obligation in exchange for total consideration
of $539.3 million in the form of $234.7 million in cash and $304.6 million
applied against the deferred purchase obligations (including accrued interest).

    In 1998, Liberty exercised certain of its preemptive rights and acquired
9,394,900 shares of USAi Common Stock in exchange for $93.9 million. USAi
contributed $93.9 million to the LLC in exchange for 9,394,900 Class A LLC
Shares. In addition, Liberty exercised certain of its preemptive rights and
acquired 15,774,708 Class C LLC Shares in exchange for $157.7 million in cash.

    On December 30, 1998, USAi acquired from Universal an entity which owned
3,411,308 Class B LLC shares in exchange for issuing to Universal 670,000 shares
of USAi Class B Common Stock and 2,741,308 shares of USAi Common Stock. The
transaction resulted in those Class B LLC Shares being converted into Class A
LLC Shares.

    In 2000, in connection with Liberty's exercise of certain of its preemptive
rights, USAi acquired 7,920,274 Class A LLC shares in exchange for
$179.1 million. In addition, USAi sold 5,836,950 Class A LLC shares back to the
LLC in exchange for $129.9 milllion.

                                       52
<PAGE>
                           USANI LLC AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

    In 1999, USAi acquired 7,277,290 Class A LLC shares in exchange for
$120.3 million. In addition, USAi acquired 11,244,900 Class A LLC shares in
exchange for $48.0 million and sold 477,892 Class A LLC shares back to the LLC
in exchange for $8.9 million.

    In 1999, Universal exercised certain of its preemptive rights and acquired
14,781,752 Class B LLC shares in exchange for $242.3 million.

    Each of the classes of the LLC Shares are identical in all material
respects. The business and affairs of the Company are managed by Mr. Barry
Diller and USAi in accordance with the Governance Agreement among USAi,
Universal, Liberty and Mr. Diller.

    By various methods, Universal and Liberty hold the right, from time to time,
to exchange Class B LLC Shares and Class C LLC Shares of the Company for either
USAi Common Stock or USAi Class B Common Stock.

NOTE 10--LITIGATION

    In the ordinary course of business, the Company is engaged in various
lawsuits, including certain class action lawsuits initiated in connection with
the Home Shopping Merger. In the opinion of management, the ultimate outcome of
the various lawsuits should not have a material impact on the liquidity, results
of operations or financial condition of the Company.

NOTE 11--BENEFIT PLANS

    The Company offers various plans pursuant to Section 401(k) of the Internal
Revenue Code covering substantially all full-time employees who are not party to
collective bargaining agreements. The Company's share of the matching employer
contributions is set at the discretion of the Board of Directors or the
applicable committee thereof.

NOTE 12--STOCK OPTION PLANS

    The following describes the stock option plans. Share numbers, prices and
earnings per share reflect USAi's two-for-one stock split to holders of record
at the close of business on February 10, 2000.

    USAi has outstanding options to employees of the Company under several plans
(the "Plans") which provide for the grant of options to purchase USAi's common
stock at not less than fair market value on the date of the grant. The options
under the Plans vest ratably, generally over a range of three to five years from
the date of grant and generally expire not more than 10 years from the date of
grant. Five of the Plans have options available for future grants.

    USAi also has outstanding options to outside directors under one plan (the
"Directors Plan") which provides for the grant of options to purchase USAi's
common stock at not less than fair market value on the date of the grant. The
options under the Directors Plan vest ratably, generally over three years from
the date of grant and expire not more than 10 years from the date of grant. A
summary of

                                       53
<PAGE>
                           USANI LLC AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

changes in outstanding options under the stock option plans following the
Company's two-for-one stock split, is as follows:

<TABLE>
<CAPTION>
                                                                        DECEMBER 31,
                                               ---------------------------------------------------------------
                                                      2000                  1999                  1998
                                               -------------------   -------------------   -------------------
                                                           PRICE                 PRICE                 PRICE
                                                SHARES     RANGE      SHARES     RANGE      SHARES     RANGE
                                               --------   --------   --------   --------   --------   --------
                                                                    (SHARES IN THOUSANDS)
<S>                                            <C>        <C>        <C>        <C>        <C>        <C>
Outstanding at beginning of period...........   68,330     $1-$37     68,916     $ 2-37     65,872     $2-37
Granted or issued in connection with
  mergers....................................   13,445     $4-$28      8,093     $16-28      7,338     $9-15
Exercised....................................   (1,915)    $1-$20     (7,881)    $ 1-13     (3,074)    $ 2-8
Cancelled....................................   (4,207)    $6-$37       (798)    $ 6-18     (1,220)    $3-13
                                                ------                ------                ------
Outstanding at end of period.................   75,653     $1-$37     68,330     $ 1-37     68,916     $2-37
                                                ======                ======                ======
Options exercisable..........................   52,082     $1-$37     44,697     $ 1-37     34,422     $2-37
                                                ======                ======                ======
</TABLE>

    The weighted average exercise prices during the year ended December 31,
2000, were $20.92, $9.69 and $20.13 for options granted, exercised and
cancelled, respectively. The weighted average fair value of options granted
during the year was $20.75.

    The weighted average exercise prices during the year ended December 31,
1999, were $23.77, $6.05 and $11.56 for options granted, options exercised and
options cancelled, respectively. The weighted average fair value of options
granted during the year was $9.52.

    The weighted average exercise prices during the year ended December 31,
1998, were $12.62, $5.04 and $12.34 for options granted, exercised and
cancelled, respectively. The weighted average fair value of options granted
during the year was $12.56.

<TABLE>
<CAPTION>
                                                 OPTIONS OUTSTANDING
                                      ------------------------------------------      OPTIONS EXERCISABLE
                                                           WEIGHTED                -------------------------
                                                            AVERAGE     WEIGHTED                    WEIGHTED
                                                           REMAINING    AVERAGE    EXERCISABLE AT   AVERAGE
                                       OUTSTANDING AT     CONTRACTUAL   EXERCISE    DECEMBER 31,    EXERCISE
RANGE OF EXERCISE PRICE               DECEMBER 31, 2000      LIFE        PRICE          2000         PRICE
-----------------------               -----------------   -----------   --------   --------------   --------
                                                                  (IN THOUSANDS)
<S>                                   <C>                 <C>           <C>        <C>              <C>
$0.01 to $5.00......................       20,824              4.7       $ 4.71        20,824        $4.71
$5.01 to $10.00.....................       31,753              6.0         8.40        26,463        12.50
$10.01 to $15.00....................        6,420              7.3        12.52         3,440        12.50
$15.01 to $20.00....................        5,983              9.3        18.57           238        18.54
$20.01 to $25.00....................        6,965              8.9        22.50           184        21.39
$25.01 to $37.00....................        3,708              8.9        27.90           933        27.91
                                           ------                                      ------
                                           75,653              7.9        10.27        52,082         7.53
                                           ======                                      ======
</TABLE>

    Pro forma information regarding net income and earnings per share is
required SFAS 123. The information is determined as if the Company had accounted
for its employee stock options granted subsequent to December 31, 1994 under the
fair market value method. The fair value for these options was estimated at the
date of grant using a Black-Scholes option pricing model with the following
weighted-average assumptions for 2000, 1999 and 1998: risk-free interest rates
of 5.0%; a dividend yield of zero; a volatility factor of .62, .44, and .56,
respectively, based on the expected market price of USAi Common Stock based on
historical trends; and a weighted-average expected life of the options of five
years.

                                       54
<PAGE>
                           USANI LLC AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

    The Black-Scholes option valuation model was developed for use in estimating
the fair market value of traded options which have no vesting restrictions and
are fully transferable. In addition, option valuation models require the input
of highly subjective assumptions including the expected stock price volatility.
Because the Company's employee stock options have characteristics significantly
different from those of traded options and because changes in the subjective
input assumptions can materially affect the fair market value estimate, in
management's opinion, the existing models do not necessarily provide a reliable
single measure of the fair value of its employee stock options.

    For purposes of pro forma disclosures, the estimated fair value of the
options is amortized to expense over the options' vesting period. The Company's
pro forma information follows:

<TABLE>
<CAPTION>
                                                    YEARS ENDED DECEMBER 31,
                                                 ------------------------------
                                                   2000       1999       1998
                                                 --------   --------   --------
                                                         (IN THOUSANDS)
<S>                                              <C>        <C>        <C>
Pro forma net income (loss)....................  $246,204   $357,900   $89,010
</TABLE>

    These pro forma amounts may not be representative of future disclosures
since the estimated fair value of stock options is amortized to expense over the
vesting period and additional options may be granted in future years.

NOTE 13--STATEMENTS OF CASH FLOWS

SUPPLEMENTAL DISCLOSURE OF NON-CASH TRANSACTIONS FOR THE YEAR ENDED
  DECEMBER 31, 2000:

    As of January 1, 2000 the Company began to consolidate the accounts of HOT
Germany, an electronic retailer operating principally in Germany, whereas its
investment in HOT Germany was previously accounted for under the equity method
of accounting.

    On January 20, 2000, the Company completed its acquisition of Ingenious
Designs, Inc. ("IDI"), by issuing approximately 190,000 shares of USAi common
stock for all the outstanding stock of IDI, for a total value of approximately
$5.0 million.

    During the second quarter, the company recorded $8.7 million of expense
related to an agreement with an executive. Of this amount, $2.9 million is a
non-cash stock compensation charge related to restricted stock.

SUPPLEMENTAL DISCLOSURE OF NON-CASH TRANSACTIONS FOR THE YEAR ENDED DECEMBER 31,
  1999:

    In 1999, the Company acquired post-production equipment through a capital
lease totaling $2.5 million.

                                       55
<PAGE>
                           USANI LLC AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

SUPPLEMENTAL DISCLOSURE OF NON-CASH TRANSACTIONS FOR THE YEAR ENDED DECEMBER 31,
  1998:

<TABLE>
<CAPTION>
                                                              (IN THOUSANDS)
                                                              --------------
<S>                                                           <C>
Acquisition of USA Cable and Studios USA
Acquisition price...........................................   $ 4,115,531
Less: Amount paid in cash...................................    (1,300,983)
                                                               -----------
Total non-cash consideration................................   $ 2,814,548
                                                               ===========
Components of non-cash consideration:
Deferred purchase price liability...........................   $   300,000
Issuance of Common Shares and Class B Shares................       277,898
Issuance of USANi LLC Shares................................     2,236,650
                                                               -----------
                                                               $ 2,814,548
                                                               ===========
Exchange of Minority Interest in USANi LLC for Deferred
  Purchase Price
Liability, including interest...............................   $   304,636
                                                               ===========
</TABLE>

    During the period ended December 31, 1998, the Company acquired computer
equipment through a capital lease totaling $15.5 million.

    On December 30, 1998, the Company acquired from Universal an entity which
owned 3,411,308 Class B LLC Shares in exchange for issuing to Universal 670,000
shares of USAi Class B Common Stock and 2,741,308 shares of USAi Common Stock.
The transaction resulted in the Class B LLC Shares being converted into Class A
LLC Shares.

    Supplemental disclosure of cash flow information:

<TABLE>
<CAPTION>
                                                      YEARS ENDED DECEMBER 31,
                                                   ------------------------------
                                                     2000       1999       1998
                                                   --------   --------   --------
                                                           (IN THOUSANDS)
<S>                                                <C>        <C>        <C>
CASH PAID DURING THE PERIOD FOR:
Interest.........................................  $35,688    $47,112    $68,751
Income tax payments..............................    5,680      3,935         --
Income tax refund................................    1,250         --         --
</TABLE>

NOTE 14--RELATED PARTY TRANSACTIONS

    As of December 31, 2000, the Company was involved in several agreements with
related parties as follows:

    Universal provides certain support services to the Company under a
Transition Services agreement entered into in connection with the Universal
Transaction. For these services, which include use of pre-production, production
and post-production facilities, information technology services, physical
distribution, contract administration, legal services and office space,
Universal charged the Company $8.2 million, $12.5 million and $15.0 million for
the years ended December 31, 2000, 1999 and 1998, respectively, of which
$4.7 million, $8.0 million and $8.5 million was capitalized to production costs,
respectively.

                                       56
<PAGE>
                           USANI LLC AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

    Universal and the Company entered into an International Television
Distribution Agreement under which the Company pays to Universal a distribution
fee of 10% on all programming owned or controlled by the Company distributed
outside of the United States. For the years ended December 31, 2000, 1999 and
1998, the fee totaled $14.0 million, $9.0 million and $1.3 million,
respectively.

    In addition, the Company and Universal entered into a Domestic Television
Distribution Agreement under which the Company distributes in the United States
certain of Universal's television programming. For the years ended December 31,
2000, 1999 and 1998, Universal paid the Company $1.5 million in each year.

    Home Shopping has affiliation agreements with USA Broadcasting ("USAB"), a
wholly owned subsidiary of USAi which provides for the USAB's broadcast of Home
Shopping's electronic retailing programming on a full-time basis. Expense
related to these affiliation agreements with USAB for the years ended
December 31, 2000, 1999 and 1998 was $35.0 million, $38.1 million and
$38.7 million, respectively.

    Under the USANi LLC Operating Agreement, USANi LLC is obligated to make a
distribution to each of the LLC members in an amount equal to each member's
share of USANi LLC's taxable income at a specified tax rate. In March 2000, the
Company made a mandatory tax distribution payment to the partners in the amount
of $118.1 million related to the year ended December 31, 1999, of which $50.1
was paid to USAi. In March 1999, the Company paid $52.8 million, of which
$24.0 million was paid to USAi.

NOTE 15--TRANSACTIONS WITH USAI AND SUBSIDIARIES

    Advances to USAi and subsidiaries generally represent net amounts
transferred from the Company to USAi and its subsidiaries to fund operations and
other related items. Pursuant to the Investment Agreement, all excess cash held
at USAi and subsidiaries is transferred to the Company no less frequently than
monthly and the Company may transfer funds to USAi to satisfy obligations of
USAi and its subsidiaries. Under the Investment Agreement, transfers of cash are
evidenced by a demand note and accrue interest at the Company's borrowing rate
under the credit facility.

    During the year ended December 31, 2000, net transfers from USANi LLC to
USAi totaling approximately $350.4 million, including $70.8 million related to
contingent purchase price payments on the Hotel Reservations Network
transaction, $69.2 million to fund the operations of USAi's television broadcast
operations, $50.7 million to fund the operations and acquisitions of
Ticketmaster, $26.9 million to fund the operations and acquisition of PRC and
$32.3 million to pay off outstanding debt of PRC at the date of acquisition,
offset partially by net receipts of $25.1 million from USA Films.

    During the year ended December 31, 1999, net transfers from USANi LLC to
USAi totaling approximately $429.1 million, including $372.2 million related to
the Hotel Reservations Network Transaction and the October Films/PFE Transaction
(including $200 million advanced to Universal pursuant to an eight year, full
recourse, interest-bearing note in connection with the acquisition of October
Films, in which Universal owned a majority interest, and the domestic film
distribution and development business of Universal previously operated by
Polygram Filmed Entertainment, Inc.), $50.9 million to fund the operations of
USAi's television broadcast operations, $98.6 million to repay a portion of the
outstanding borrowings assumed in the October Films/PFE Transaction and
$8.8 million to fund the operations of USA Films. Funds were also transferred to
USAi to purchase shares of treasury stock. These amounts were offset by
$79.4 million and $40.0 million of funds transferred to USANi LLC from the
Ticketing operations business and the Hotel reservations business, respectively.
During the year ended December 31, 1998 net cash transfers totaling
approximately $118.2 million were

                                       57
<PAGE>
                           USANI LLC AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

made to repay USAi's revolving credit facility, repay Ticketmaster's bank credit
facility, and fund the operations of USAi's broadcast operation, offset by
proceeds from the sale of the assets of SF Broadcasting and USAi's Baltimore
television station. The interest incurred on the net transfers for the years
ended December 31, 2000, 1999 and 1998 was approximately $2.9 million,
$7.2 million and $9.5 million, respectively.

    The Company allocates certain overhead expenses to the USAi parent company
based upon the fair value of services performed. Expenses allocated for the
periods ended December 31, 2000, 1999 and 1998 were $11.6 million, $8.6 million
and $5.9 million, respectively.

    In accordance with the Investment Agreement, certain transfers of funds
between the Company and USAi are not evidenced by a demand note and do not
accrue interest, primarily relating to the establishment of the operations of
the Company and to equity contributions.

NOTE 16--QUARTERLY RESULTS (UNAUDITED)

<TABLE>
<CAPTION>
                                    QUARTER         QUARTER      QUARTER     QUARTER
                                     ENDED           ENDED        ENDED       ENDED
                                  DECEMBER 31,   SEPTEMBER 30,   JUNE 30,   MARCH 31,
                                  ------------   -------------   --------   ---------
                                                    (IN THOUSANDS)
<S>                               <C>            <C>             <C>        <C>
YEAR ENDED DECEMBER 31, 2000
Net revenues....................    $973,582       $779,367      $799,849   $807,334
Operating profit................     (34,826)        81,347        99,769    117,984
Net earnings(a)(b)..............     (12,045)       148,020        88,783    105,119
YEAR ENDED DECEMBER 31, 1999
Net revenues....................    $759,198       $629,281      $645,721   $652,279
Operating profit................     117,254         68,048        76,450     81,843
Net earnings(c).................     112,337         96,487        58,865    127,299
</TABLE>

------------------------

(a) In the third quarter of 2000, the Company recorded a pre-tax gain of
    $104.6 million based upon the 25% of ISN exchanged for 75% of Styleclick.com
    in the Styleclick transaction.

(b) During the fourth quarter of 2000, the Company recorded a pre-tax charge of
    $145.6 million related to the impairment of Styleclick goodwill.

(c) In the first quarter of 1999, the Company recorded a gain of $10.4 million
    related to the reversal of equity losses which were previously recorded in
    1998 as a result of the Universal Transaction. Furthermore, the Company
    recorded gains on the sale of securities of $47.3 million, $3.0 million, and
    $39.5 million in the first, second and third quarter of 1999, respectively.

NOTE 17--INDUSTRY SEGMENTS

    The Company operates principally in five industry segments: Cable and
studios, Electronic retailing, Styleclick, Electronic commerce solutions and
Emerging networks. The Cable and studios segment consists of the cable networks
USA Network and Sci Fi Channel and Studios USA, which produces and distributes
television programming. The Electronic-retailing segment consists of Home
Shopping Network, America's Store, HSN International and HSN Interactive, which
are engaged in the sale of merchandise through electronic retailing. The
Styleclick segment represents Styleclick, Inc., a facilitator of e-commerce
websites and Internet enabled applications which includes the Company's online
retailing networks. The Electronic commerce solutions segment primarily
represents the Company's customer and e-care businesses. The Emerging networks
segment consists primarily of the

                                       58
<PAGE>
                           USANI LLC AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

recently acquired cable television properties Trio and NewsWorld International,
which were acquired on May 19, 2000, and SciFi.com, an emerging Internet content
and commerce site.

<TABLE>
<CAPTION>
                                                                 YEARS ENDED DECEMBER 31,
                                                           ------------------------------------
                                                              2000         1999         1998
                                                           ----------   ----------   ----------
                                                                      (IN THOUSANDS)
<S>                                                        <C>          <C>          <C>
REVENUE
Cable and studios........................................  $1,530,464   $1,304,683   $1,085,685
Electronic retailing.....................................   1,778,986    1,341,828    1,207,867
Styleclick...............................................      22,308       28,962       23,969
Electronic commerce solutions............................       8,042        2,924          809
Emerging networks........................................      20,332        1,188           --
Other....................................................          --        6,894       14,495
                                                           ----------   ----------   ----------
                                                           $3,360,132   $2,686,479   $2,332,825
                                                           ==========   ==========   ==========
OPERATING PROFIT (LOSS)
Cable and studios........................................  $  435,114   $  320,878   $  190,191
Electronic retailing.....................................     109,793      100,446       75,536
Styleclick...............................................    (206,964)     (42,407)     (17,296)
Electronic commerce solutions............................     (23,057)      (4,181)         966
Emerging networks........................................     (13,244)      (2,989)          --
Corporate and other......................................     (37,368)     (28,152)     (17,667)
                                                           ----------   ----------   ----------
                                                           $  264,274   $  343,595   $  231,730
                                                           ==========   ==========   ==========
ASSETS
Cable and studios........................................  $5,885,301   $5,524,236   $5,190,669
Electronic retailing.....................................   1,989,166    1,809,400    1,776,933
Styleclick...............................................      47,149       27,622       12,711
Electronic commerce solutions............................     (10,423)       1,001          591
Emerging networks........................................     100,943          200           --
Corporate and other......................................     (39,268)     110,467       21,781
                                                           ----------   ----------   ----------
                                                           $7,972,868   $7,472,926   $7,002,685
                                                           ==========   ==========   ==========
DEPRECIATION AND AMORTIZATION
Cable and studios........................................  $  112,568   $  113,034   $   99,225
Electronic retailing.....................................     112,158       83,808       72,312
Styleclick...............................................     175,090        3,167        1,436
Electronic commerce solutions............................       4,768           --           --
Emerging networks........................................       6,124           --           --
Corporate and other......................................       2,405        2,210        1,653
                                                           ----------   ----------   ----------
                                                           $  413,113   $  202,219   $  174,626
                                                           ==========   ==========   ==========
CAPITAL EXPENDITURES
Cable and studios........................................  $   15,229   $    6,771   $    5,616
Electronic retailing.....................................      52,227       47,158       42,258
Styleclick...............................................       2,487       13,618        2,968
Electronic commerce solutions............................       2,560           39           11
Emerging networks........................................         600           --           --
Other....................................................      21,723        3,095        1,232
                                                           ----------   ----------   ----------
                                                           $   94,826   $   70,681   $   52,085
                                                           ==========   ==========   ==========
</TABLE>

    The Company operates principally within the United States.

                                       59
<PAGE>
                           USANI LLC AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 18--FINANCIAL INSTRUMENTS

    The additional disclosure below of the estimated fair value of financial
instruments was made in accordance with the requirements of Statements of
Financial Accounting Standards No. 107. The estimated fair value amounts have
been determined by the Company using available market information and
appropriate valuation methodologies when available. The carrying value of all
current assets and current liabilities approximates fair value due to their
short-term nature.

<TABLE>
<CAPTION>
                                     DECEMBER 31, 2000       DECEMBER 31, 1999
                                   ---------------------   ---------------------
                                   CARRYING      FAIR      CARRYING      FAIR
                                    AMOUNT       VALUE      AMOUNT       VALUE
                                   ---------   ---------   ---------   ---------
                                                  (IN THOUSANDS)
<S>                                <C>         <C>         <C>         <C>
Cash and cash equivalents........  $  71,816   $  71,816   $ 247,474   $ 247,474
Long-term investments............     29,187      29,187      93,742      93,742
Long-term obligations............   (524,116)   (524,116)   (531,097)   (531,097)
</TABLE>

NOTE 19--PROGRAM RIGHTS AND FILM COSTS

    As of December 31, 2000, the liability for program rights, representing
future payments to be made under program contract agreements amounted to
$520.5 million. Annual payments required are $241.7 million in 2001,
$153.2 million in 2002, $79.3 million in 2003, $30.0 million in 2004,
$18.8 million in 2005 and $4.5 million in 2006 and thereafter. Amounts
representing interest are $50.2 million and the present value of future payments
is $470.3 million.

    As of December 31, 2000, the liability for film costs amounted to
$108.7 million. Annual payments are $70.2 million in 2001 and $38.5 million in
2002.

    Unrecorded commitments for program rights consist of programs for which the
license period has not yet begun or the program is not yet available to air. As
of December 31, 2000, the unrecorded commitments amounted to $781.6 million.
Annual commitments are $144.2 million in 2001, $160.5 million in 2002,
$146.8 million in 2003, $134.0 million in 2004, $99.5 million in 2005 and
$96.6 million in 2006 and thereafter.

NOTE 20--GUARANTEE OF NOTES

    On November 23, 1998, USAi and the Company completed an offering of
$500.0 million 6 3/4% Senior Notes due 2005 (the "Old Notes"). In May 1999, the
Old Notes were exchanged in full for $500.0 million of new 6 3/4% Senior Notes
due 2005 (the "Notes") that have terms that are substantially identical to the
Old Notes. Interest is payable on the Notes on May 15 and November 15 of each
year, commencing May 15, 1999. The Notes are jointly, severally, fully and
unconditionally guaranteed by certain subsidiaries of USAi, including Holdco, a
non-wholly owned, direct subsidiary of USAi, and all of the subsidiaries of the
Company (other than subsidiaries that are, individually and in the aggregate,
inconsequential to the Company on a consolidated basis) (collectively, the
"Subsidiary Guarantors"). All of the Subsidiary Guarantors (other than Holdco)
(the "Wholly Owned Subsidiary Guarantors") are wholly owned, directly or
indirectly, by USAi or the Company, as the case may be.

    Separate financial statements for each of the Wholly Owned Subsidiary
Guarantors are not presented and such Wholly Owned Subsidiary Guarantors are not
filing separate reports under the Securities Exchange Act of 1934 because USAi's
and the Company's management has determined that

                                       60
<PAGE>
                           USANI LLC AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

the information contained in such documents would not be material to investors.
USANi LLC and its subsidiaries have no material restrictions on their ability to
transfer amounts to fund USAi's operations.

    During 2000, in conjunction with the Styleclick Transactions, Styleclick
became a non-guarantor. The following information is presented as of and for the
year ended December 31, 2000:

<TABLE>
<CAPTION>
                                                WHOLLY
                                                 OWNED
                                   USANI      SUBSIDIARY    NON-GUARANTOR                      LLC
                                    LLC       GUARANTORS    SUBSIDIARIES    ELIMINATIONS   CONSOLIDATED
                                 ----------   -----------   -------------   ------------   ------------
<S>                              <C>          <C>           <C>             <C>            <C>
Current assets.................  $   80,996   $ 1,091,703     $  41,018     $        --    $ 1,213,717
Property and equipment net.....      24,203       211,137        16,300              --        251,640
Goodwill and other intangible
  assets, net..................          --     4,997,365       102,111              --      5,099,476
Investment in subsidiaries.....   5,596,407        99,345            --      (5,695,752)            --
Other assets...................     966,855     1,446,314            --      (1,005,134)     1,408,035
                                 ----------   -----------     ---------     -----------    -----------
Total assets...................  $6,668,461   $ 7,845,864     $ 159,429     $(6,700,886)   $ 7,972,868
                                 ==========   ===========     =========     ===========    ===========

Current liabilities............  $   30,518   $   873,078     $  19,681     $        --    $   923,277
Long-term debt, less current
  portion......................     498,212         5,851            --              --        504,063
Other liabilities..............          --       374,320        26,230         (23,415)       377,135
Minority interest..............                    15,082            --          13,580         28,662
Interdivisional equity.........          --     6,577,533       113,518      (6,691,051)            --
Stockholders' equity...........   6,139,731            --            --              --      6,139,731
                                 ----------   -----------     ---------     -----------    -----------
Total liabilities and
  shareholders' equity.........  $6,668,461   $ 7,845,864     $ 159,429     $(6,700,886)   $ 7,972,868
                                 ==========   ===========     =========     ===========    ===========

Revenue........................  $       --   $ 3,313,614     $  46,518     $        --    $ 3,360,132
Operating expenses.............     (37,368)   (2,772,283)     (286,207)             --     (3,095,858)
Interest expense, net..........      22,208       (30,531)           --              --         (8,323)
Gain on sale of securities.....          --            --            --              --             --
Other income (expense), net....     345,037        (5,189)          237        (281,319)        58,766
Provision for income taxes.....          --       (25,132)       (1,305)             --        (26,437)
Minority interest..............          --        (5,196)           --          46,793         41,597
                                 ----------   -----------     ---------     -----------    -----------
Net (loss) income..............  $  329,877   $   475,283     $(240,757)    $  (234,526)   $   329,877
                                 ==========   ===========     =========     ===========    ===========

Cash flows from operations.....  $   (9,402)  $   411,291     $ (41,650)    $        --    $   360,239
Cash flows used in investing
  activities...................      (6,061)     (232,255)       (7,484)             --       (245,800)
Cash flows from financing
  activities...................  $ (128,052)  $  (228,323)    $  65,078     $        --    $  (291,297)
Effect of exchange rate........          --         1,200            --              --          1,200
Cash at the beginning of the
  period.......................     221,594        25,513           367              --        247,474
                                 ----------   -----------     ---------     -----------    -----------
Cash at the end of the
  period.......................  $   78,079   $   (22,574)    $  16,311     $        --    $    71,816
                                 ==========   ===========     =========     ===========    ===========
</TABLE>

    1999 and 1998 were not presented because non-guarantor subsidiaries for
these periods were not material.

                                       61
<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURES

    Not applicable.

                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

    The following table presents the name, age and position of individuals who
serve as directors and executive officers of USANi LLC. All biographical
information is as of March 1, 2001. Except as otherwise indicated, each
individual who serves as a director or executive officer of USANi LLC also
serves in the same capacity at USAi. Each director will hold office until the
next annual meeting of stockholders or until his or her successor has been
elected and qualified or until his or her earlier death, resignation or removal.
Officers of USANi LLC are appointed by the Board of Directors of USANi LLC and
serve at the discretion of the Board.

<TABLE>
<CAPTION>
NAME                                          AGE                       POSITION
----                                        --------   ------------------------------------------
<S>                                         <C>        <C>
Barry Diller..............................     59      Director, Chairman of the Board and Chief
                                                       Executive Officer

Victor A. Kaufman.........................     56      Director and Vice Chairman

Dara Khosrowshahi.........................     31      Executive Vice President, Strategic
                                                       Operations and Planning

Julius Genachowski........................     38      Senior Vice President, General Counsel and
                                                       Secretary

Michael Sileck............................     40      Senior Vice President and Chief Financial
                                                       Officer

Paul G. Allen.............................     48      Director

Robert R. Bennett(1)......................     42      Director

Edgar Bronfman, Jr........................     45      Director

Anne M. Busquet...........................     51      Director

Philippe Germond..........................     44      Director

Donald R. Keough..........................     74      Director

Georg Kofler..............................     43      Director

Marie-Josee Kravis........................     51      Director

Pierre Lescure............................     55      Director

John C. Malone(1).........................     59      Director

Jean-Marie Messier........................     44      Director

William D. Savoy..........................     36      Director

Gen. H. Norman Schwarzkopf................     66      Director

Diane Von Furstenberg.....................     52      Director
</TABLE>

------------------------

(1) Director of USANi LLC only.

    PAUL G. ALLEN has been a director of USAi and USANi LLC since July 1997.
Mr. Allen has been a private investor for more than five years, with interests
in a wide variety of companies, many of which focus on multimedia digital
communications. These companies include Vulcan Ventures Inc., of which
Mr. Allen is the President, Chief Executive Officer and Chairman of the Board,
Vulcan Northwest Inc.,

                                       62
<PAGE>
of which Mr. Allen is Chairman of the Board, Charter Communications, Inc., of
which Mr. Allen is Chairman of the Board, and Vulcan Programming, Inc. In
addition, Mr. Allen is the Chairman of the Board of Trail Blazers, Inc. of the
National Basketball Association and is the owner and Chairman of the Board of
the Seattle Seahawks of the National Football League. Mr. Allen currently serves
as a director of Microsoft Corporation and Charter Communications, Inc., and
also serves as a director of various private corporations.

    ROBERT R. BENNETT has been a director of USANi LLC since February 1998.
Mr. Bennett has also served as the President and Chief Executive Officer of
Liberty since April 1997 and a director of Liberty since September 1994.
Mr. Bennett served as Executive Vice President of TCI from April 1997 until the
acquisition of TCI by AT&T Corp. in March 1999. Mr. Bennett served as the
Executive Vice President, Secretary and Treasurer of Liberty from June 1995
through March 1997, Chief Financial Officer from May 1996 through March 1997,
and in various executive positions since Liberty's inception in 1990.
Mr. Bennett also served as acting Chief Financial Officer of Liberty
Digital, Inc. from June 1997 to July 1997. Mr. Bennett is a director of
Gemstar-TV Guide International, Inc., Liberty Livewire Corporation, Liberty
Satellite & Technology, Inc., and Telewest Communications plc and serves as
Chairman of the Board of Liberty Digital, Inc.

    EDGAR BRONFMAN, JR. has been a director of USAi and USANi LLC since
February 1998. He has been Executive Vice Chairman of Vivendi Universal since
December 2000. Previously, he had been President and Chief Executive Officer of
The Seagram Company Ltd. since June 1994 and before that he was President and
Chief Operating Officer of Seagram. Mr. Bronfman is a director of Vivendi
Universal and a member of the Boards of New York University Medical Center, The
Wharton School of the University of Pennsylvania, and the Board of Governors of
The Joseph H. Lauder Institute of Management & International Studies at the
University of Pennsylvania.

    ANNE M. BUSQUET has been a director of USAi and USANi LLC since March 1999.
She has been the President, Interactive Services and New Businesses, an American
Express division, since July 2000. Previously, she was President of American
Express Relationship Services from October 1995 to July 2000 and the Executive
Vice President of American Express' Consumer Card Group since November 1993. She
is a member of the Board of Trustees for Teach of America, Rheedlen Centers for
Children and Families and the Cornell University Trustees Council. She also
serves on the Board of Directors for Globeset, Inc. and Protege, Inc.

    BARRY DILLER has been a director and the Chairman and Chief Executive
Officer of USAi (or its predecessors) and USANi LLC since August 1995 and
February 1998, respectively. He was Chairman of the Board and Chief Executive
Officer of QVC, Inc. from December 1992 through December 1994. From 1984 to
1992, Mr. Diller served as the Chairman of the Board and Chief Executive Officer
of Fox, Inc. Prior to joining Fox, Inc., Mr. Diller served for 10 years as
Chairman of the Board and Chief Executive Officer of Paramount Pictures
Corporation. Mr. Diller was a director and member of the Executive Committee of
Seagram until December 8, 2000, and currently serves as a director of
Ticketmaster and The Washington Post Company. He also serves on the Board of the
Museum of Television and Radio, the New York Public Library, Conservation
International and 13/WNET. In addition, Mr. Diller is a member of the Board of
Councilors for the University of Southern California's School of
Cinema-Television, the New York University Board of Trustees, the Tisch School
of the Arts Dean's Council, the Executive Board for the Medical Sciences of
University of California, Los Angeles and the Board of the Children's Advocacy
Center of Manhattan.

    JULIUS GENACHOWSKI has been Senior Vice President, General Counsel and
Secretary of USAi since August 2000. Mr. Genachowski joined the Company in
December 1997 as General Counsel and Senior Vice President, Business Development
of USA Broadcasting. He has also held the position of Vice President, Corporate
Development at Ticketmaster Online-Citysearch, Inc. Before joining USAi, he
served as Chief Counsel to Federal Communications Commission Chairman Reed
Hundt.

                                       63
<PAGE>
Mr. Genachowski served as a law clerk to Supreme Court Justice David H. Souter
in 1993-1994 and, in 1992-1993, to retired Supreme Court Justice William J.
Brennan, Jr. He was also a law clerk to Chief Judge Abner J. Mikva of the U.S.
Court of Appeals for the D.C. Circuit. Mr. Genachowski serves as a director of
Styleclick, Inc.

    PHILIPPE GERMOND has been a director of USAi and USANi LLC since
March 2001. He has been Chief Executive Officer of Cegetel since January 1997,
Chairman of Cegetel since November 2000 and Chairman and Chief Executive Officer
of Vivendinet since December 2000. In addition, Mr. Germond is a member of the
Executive Committee of Vivendi Universal. Prior to his employment at Cegetel,
Mr. Germond served as Chief Executive Officer of SFR, a subsidiary of Cegetel,
from 1995 until 1996, and as Managing Director of Hewlett Packard Europe
(Personal Computers and Peripherals group) from 1994 until 1995.

    VICTOR A. KAUFMAN has been a director of USAi and USANi LLC since
December 1996 and February 1998, respectively. Mr. Kaufman has also been Vice
Chairman of USAi since October 1999. Previously, Mr. Kaufman served in the
Office of the Chairman for USAi since January 1997 and as Chief Financial
Officer of USAi since November 1, 1997. Prior to that time, he served as
Chairman and Chief Executive Officer of Savoy since March 1992 and as a director
of Savoy since February 1992. Mr. Kaufman was the founding Chairman and Chief
Executive Officer of Tri-Star Pictures, Inc. from 1983 until December 1987, at
which time he became President and Chief Executive Officer of Tri-Star's
successor company, Columbia Pictures Entertainment, Inc. He resigned from these
positions at the end of 1989 following the acquisition of Columbia by Sony
USA, Inc. Mr. Kaufman joined Columbia in 1974 and served in a variety of senior
positions at Columbia and its affiliates prior to the founding of Tri-Star.
Mr. Kaufman also serves as a director of Ticketmaster and Hotel Reservations
Network, Inc.

    DONALD R. KEOUGH has been a director of USAi and USANi LLC since
September 1998. He is Chairman of the Board of Allen & Company Incorporated, a
New York investment banking firm. He was elected to that position in
April 1993. Mr. Keough retired as President, Chief Operating Officer and a
director of The Coca-Cola Company in April 1993. Mr. Keough serves as a director
on the boards of H.J. Heinz Company, The Washington Post Company, McDonald's
Corporation and YankeeNets, LLC. He is immediate past chairman of the board of
trustees of the University of Notre Dame and a trustee of several other
educational institutions. He also serves on the boards of a number of national
charitable and civic organizations.

    DARA KHOSROWSHAHI has been Executive Vice President, Operations and
Strategic Planning of USAi since July 2000. From August 1999 to July 2000,
Mr. Khosrowshahi served as President, USA Networks Interactive, a division of
USAi. Mr. Khosrowshahi joined USAi in 1998 as Vice President of Strategic
Planning for USAi, and was later promoted to Senior Vice President in May 1999.
Prior to joining USAi, Mr. Khosrowshahi worked at Allen & Company Incorporated
from 1991 to 1998 where he served as Vice President from 1995 to 1998. He is a
member of the Board of Directors of BET.com, Hotel Reservations Network, Inc.
and ARTISTDirect.

    GEORG KOFLER has been a director of USAi and USANi LLC since July 2000.
Dr. Kofler has been CEO of H.O.T. Networks AG, a holding company for home
shopping channels in Europe, since December 2000 and Chairman of the Supervisory
Board of H.O.T. Home Order Television AG since December 1999. Previously, from
December 1988 through 1999, he was CEO of ProSieben Media AG, a media company
based in Munich, Germany. Prior to joining ProSieben, Dr. Kofler assisted
Dr. Leo Kirch as Office Supervisor in the Kirch Group from 1987 to 1988.
Dr. Kofler is a shareholder of both H.O.T. Networks AG and H.O.T. Home Order
Television AG. He is also Chairman of the Supervisory Board of EUVIA Media AG &
Co.KG, the 100% parent company of tm 3, a Munich based television station.

    MARIE-JOSEE KRAVIS has been a director of USAi and USANi LLC since
March 2001. She is a Senior Fellow of the Hudson Institute as well as the
Council on Foreign Relations. Mrs. Kravis has been

                                       64
<PAGE>
associated with the Hudson Institute since 1973 when she joined as a senior
economist. She held a number of positions with the Hudson Institute before being
elected executive director of the Hudson Institute of Canada in 1976. She
returned to the U.S. and became a Senior Fellow of the Institute in 1994.
Mrs. Kravis received an honorary doctorate of law at the University of Windsor
and Laurentian University. She obtained a master's degree in economics from the
University of Ottawa. She was a member of the Quebec government's Consultative
Committee on Financial Institutions, Vice Chair of the federal Royal Commission
on National Passenger Transportation, member of the Canadian government's
Communications Research Advisory Board and the Canadian Council for Research on
Social Science and the Humanities. Mrs. Kravis is also a director of Canadian
Imperial Bank of Commerce, Hasbro, Inc., Hollinger International Inc., Ford
Motor Company and StarMedia Network, Inc.

    PIERRE LESCURE has been a director of USAi and USANi LLC since March 2001.
He became co-Chief Operating Officer of Vivendi Universal S.A. in
December 2000, upon the merger of Vivendi, The Seagram Company Ltd. and Canal
Plus S.A. He is also Chairman and Chief Executive Officer of Canal Plus S.A.
since February 16, 1994 and Chairman of the Executive Board of Groupe Canal Plus
since December 11, 2000. Mr. Lescure helped launch Canal Plus Image in 1984.
Mr. Lescure is a Member of the Board of Directors of the European studio
StudioCanal, Chairman of its French subsidiary, StudioCanal France, and is also
Chairman of the Paris-Saint Germain (PSAG) soccer club.

    JOHN C. MALONE has been a director of USANi LLC since September 1998.
Dr. Malone has served as Chairman of the Board and a director of Liberty since
1990, and as Chairman of the Board and a director of TCI Satellite
Entertainment, Inc. since December 1996. Dr. Malone served as Chairman of the
Board of TCI from November 1996 until the acquisition of TCI by AT&T Corp. in
March 1999, as Chief Executive Officer of TCI from January 1994 to March 1999,
and as President of TCI from January 1994 to March 1997. Dr. Malone served as
Chief Executive Officer of TCI Communications, Inc., the domestic cable
subsidiary of TCI prior to the AT&T merger ("TCIC"), from March 1992 to
October 1994, and as President of TCIC from 1973 to October 1994. Dr. Malone is
also a director of AT&T, The Bank of New York, Black Entertainment Television
Holdings II, Liberty Media Corporation, TCI, TCI Satellite Entertainment, Inc.,
United Global Communications and 360 Networks, Inc.

    JEAN-MARIE MESSIER has been a director of USAi and USANi LLC since
March 2001. He became Chief Executive Officer of Vivendi Universal S.A. in
December 2000, upon the merger of Vivendi, The Seagram Company Ltd. and Canal
Plus S.A. Prior to the creation of Vivendi Universal S.A., Mr. Messier was
Chairman and Chief Executive Officer of Vivendi from 1996. Mr. Messier is
co-chairman of Europe and Africa of the Global Business Dialogue on Electronic
Commerce (GBDe) and chairman of the China Europe Business Committee.
Mr. Messier also serves as a director of BNP Paribas, Louis Vuitton Moet
Hennessey (LVMH), Saint-Gobain and Alcatel.

    WILLIAM D. SAVOY has been a director of USAi and USANi LLC since July 1997.
Currently, Mr. Savoy serves as President of Vulcan Ventures Inc., a venture
capital fund wholly owned by Paul Allen. From 1987 until November 1990,
Mr. Savoy was employed by Layered, Inc. and became its President in 1988.
Mr. Savoy serves on the Advisory Board of DreamWorks SKG and also serves as
director of Charter Communications, Inc., drugstore.com, High Speed Access
Corporation, InfoSpace, Inc., Metricom, Inc., Peregrine Systems, Inc., RCN
Corporation and Telescan, Inc.

    GEN. H. NORMAN SCHWARZKOPF has been a director of USAi and USANi LLC since
December 1996. He previously had served as a director of Home Shopping Network
since May 1996. Since his retirement from the military in August 1991, Gen.
Schwarzkopf has been an author, a lecturer and a participant in several
television specials and works with NBC as a consultant. From August 1990 to
August 1991, he served as Commander-in-Chief, United States Central Command and
Commander of Operations, Desert Shield and Desert Storm. General Schwarzkopf had
35 years of service with the

                                       65
<PAGE>
military. He is also on the Nature Conservancy's President's Conservation
Council, Chairman of the Starbright Capital Campaign, co-founder of the Boggy
Creek Gang, a member of the University of Richmond Board of Trustees, and serves
on the Boards of Directors of Remington Arms Company and Cap CURE, Association
for the Cure of Cancer of the Prostate.

    MICHAEL SILECK, has been Senior Vice President and Chief Financial Officer
of USAi since October 1999. Prior to that time, he served as Chief Financial
Officer of USA Networks, a division of USAi, from September 1999 to
October 1999. Before joining USA Networks, Mr. Sileck served as Vice President
of Finance of Sinclair Broadcast Group from June 1996 to August 1999. Prior to
that time, Mr. Sileck served as Director of Finance at River City Broadcasting
from July 1990 to June 1996. Mr. Sileck serves as a director of Hotel
Reservations Network, Inc. and Styleclick, Inc.

    DIANE VON FURSTENBERG has been a director of USAi and USANi LLC since
March 1999. She is the founder of Diane Von Furstenberg Studio L.P. and has
served as its Chairman since August 1995. Previously, she was the Chairman of
Diane Von Furstenberg Studio, which she also founded.

    Mr. Diller and Ms.Von Furstenberg are married.

BOARD COMMITTEES

    EXECUTIVE COMMITTEE.  The Executive Committee of the Board of Directors of
USANi LLC, consisted of Messrs. Bronfman, Diller and Kaufman during 2000. The
Executive Committee has all the power and authority of the Board of Directors of
USANi LLC, except those powers specifically reserved to the Board by Delaware
law or USANi LLC's organizational documents.

    AUDIT COMMITTEE.  The Audit Committee of the Board of Directors of USANi LLC
currently consists of Messrs. Keough and Savoy and Gen. Schwarzkopf, each of
whom is "independent" in accordance with the standards imposed by the National
Association of Securities Dealers listing standards. The Audit Committee is
authorized to recommend to the Board of Directors independent certified public
accounting firms for selection as auditors of the Company; make recommendations
to the Board of Directors on auditing matters; examine and make recommendations
to the Board of Directors concerning the scope of audits; and review and approve
the terms of transactions between or among the Company and related parties.
Mr. Keough is Chairman of the Audit Committee.

    COMPENSATION/BENEFITS COMMITTEE.  The Compensation/Benefits Committee of the
Board of Directors of USANi LLC, currently consisting of Messrs. Keough and
Savoy and Ms. Busquet, is authorized to exercise all of the powers of the Board
of Directors with respect to matters pertaining to compensation and benefits,
including, but not limited to, salary matters, incentive/bonus plans, stock
option plans, investment programs and insurance plans, except that the
Performance-Based Compensation Committee exercises such powers with respect to
performance-based compensation of corporate officers who are, or who may become,
subject to Section 162(m) of the Internal Revenue Code. The
Compensation/Benefits Committee is also authorized to exercise all of the powers
of the Board of Directors in matters pertaining to employee promotions and the
designation and/or revision of employee positions and job titles. None of the
members of the Compensation/Benefits Committee is an employee of USANi LLC or
USAi. Mr. Savoy is Chairman of the Compensation/Benefits Committee.

    PERFORMANCE-BASED COMPENSATION COMMITTEE.  The Performance-Based
Compensation Committee of the Board of Directors of USANi LLC, currently
consisting of Mr. Savoy and Ms. Busquet, is authorized to exercise all of the
powers of the Board of Directors with respect to matters pertaining to
performance-based compensation of corporate officers who are, or may become,
subject to Section 162(m) of the Internal Revenue Code. Section 162(m) limits
the deductibility of compensation in excess of $1,000,000 paid to a
corporation's chief executive officer and four other most highly compensated
executive officers, unless certain conditions are met. None of the members of
the Performance-Based Compensation Committee is an employee of USANi LLC or
USAi.

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<PAGE>
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

    USANi LLC does not have an class of equity securities registered pursuant to
Section 12 of the Exchange Age. Accordingly, no person is subject to Section 16
of the Exchange Act with respect to USANi LLC.

ITEM 11. EXECUTIVE COMPENSATION

GENERAL

    This section contains information pertaining to compensation of the Chief
Executive Officer of USANi LLC and the four most highly compensated executive
officers of USANi LLC other than the Chief Executive Officer, as well as
information pertaining to the compensation of members of the Board of Directors
of USANi LLC.

    The following table presents information concerning total compensation
earned by the Named Executive Officers--the Chief Executive Officer and the four
other most highly compensated executive officers of USANi LLC who served in such
capacities as of December 31, 2000--for services rendered to USAi and USANi LLC
during each of the last three fiscal years. The information presented below
represents all compensation earned by the Named Executive Officers for all
services performed for USAi or USANi LLCor any of their subsidiaries. The Named
Executive Officers did not receive separate or additional compensation for
serving in their respective capacities for USAi or USANi LLC.

                           SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
                                                                                      LONG-TERM COMPENSATION
                                                   ANNUAL COMPENSATION             -----------------------------
                                          --------------------------------------    RESTRICTED
                                                                   OTHER ANNUAL       STOCK                          ALL OTHER
NAME AND PRINCIPAL              FISCAL                             COMPENSATION       AWARDS      STOCK OPTIONS    COMPENSATION
POSITION                         YEAR     SALARY ($)   BONUS ($)      ($)(1)          ($)(2)          (#)(3)            ($)
------------------             --------   ----------   ---------   -------------   ------------   --------------   -------------
<S>                            <C>        <C>          <C>         <C>             <C>            <C>              <C>
Barry Diller.................    2000      500,000     1,675,000(4)    146,563(5)         --              --           316,736(7)(8)
  Chairman and Chief             1999      500,000           --            --             --              --           920,992(7)(8)
  Executive Officer              1998      126,923(6)        --            --             --              --         1,288,472(7)(8)

Victor A. Kaufman............    2000      650,000     1,500,000(4)    193,155(10)   278,438(11)     750,000             5,250(8)
  Vice Chairman(9)               1999      500,000     1,050,000           --        837,188         700,000             4,800(8)
                                 1998      500,000      450,000(12)         --       500,000         200,000             4,800(8)

Dara Khosrowshahi............    2000      421,148      650,000(4)     81,250(5)     278,438(11)     565,000(14)         5,250(8)
  Executive Vice                 1999      341,552      400,000(15)         --       837,188         100,000             4,800(8)
 President, Operations and       1998      248,077      300,000(12)         --       125,000         220,000                --
 Strategic Planning(13)

Julius Genachowski...........    2000      338,173(17)  500,000(4)     95,149(18)    278,438(11)     450,000             5,250(8)
 Senior Vice President,
 General Counsel and
 Secretary(16)

Michael Sileck...............    2000      400,000      500,000(4)         --        278,438(11)     350,000             5,250(8)
 Senior Vice President and       1999      107,688       65,000            --             --         100,000                --
 Chief Financial Officer(19)
</TABLE>

------------------------------

 (1) Disclosure of perquisites and other personal benefits, securities or
     property received by each of the Named Executive Officers is only required
     where the aggregate amount of such compensation exceeded the lesser of
     $50,000 or 10% of the total of the Named Executive Officer's salary and
     bonus for the year.

 (2) Reflects the dollar value of a restricted stock award determined by
     multiplying the number of shares in the award by the closing price of USAi
     common stock as of the date of the grant. Restricted stock awards vest on
     the third anniversary of the date of the grant and are forfeited if, before
     vesting, the award recipient voluntarily terminates his employment.

 (3) All figures in this column reflect options to purchase USAi common stock,
     as adjusted, to the extent applicable, for two two-for-one stock splits
     that became effective for holders of record as of the close of business on
     March 12, 1998 and February 10, 2000, respectively.

                                       67
<PAGE>
 (4) Of this amount, Messrs. Diller, Kaufman, Khosrowshahi, Genachowski and
     Sileck elected to defer $586,250, $750,000, $325,000, $175,000 and
     $100,000, respectively, under USAi's 2000 Bonus Stock Purchase Program.
     Under the 2000 Bonus Stock Purchase Program, in lieu of receiving a cash
     payment for the entire amount of their 2000 bonuses, all bonus eligible
     employees of USAi had a right to elect to purchase shares of common stock
     with up to 50% of the value of their 2000 bonus payments. Employees were
     entitled to purchase these shares at a 20% discount to the then current
     market value of USAi common stock, as determined in accordance with the
     terms of the Program.

 (5) Reflects the 20% discount on the purchase price of USAi shares purchased
     under the 2000 Bonus Stock Purchase Program (described in Note 4 above).

 (6) Reflects an annual base salary of $500,000 commencing September 25, 1998.

 (7) Mr. Diller has an interest-free, secured, non-recourse promissory note in
     the amount of $4,997,779 payable to USAi which was used to purchase 883,976
     shares of common stock. As a result, Mr. Diller had compensation for
     imputed interest of $286,368 in 1998, $286,368 in 1999 and $311,486 in
     2000. In addition, Mr. Diller was granted options in 1995 to purchase
     7,583,388 shares of common stock, vesting over a four-year period, at an
     exercise price below the fair market value of common stock on the date of
     grant. USAi has amortized unearned compensation of $999,162 in 1998 and
     $630,912 in 1999.

 (8) Includes USAi's matching contributions under its 401(k) Retirement Savings
     Plan. Under the 401(k) Plan as in effect through December 31, 2000, USAi
     matches $.50 for each dollar a participant contributes up to the first 6%
     of compensation. For fiscal 1998, USAi's matching contributions for
     Messrs. Diller and Kaufman were $3,519 and $4,800, respectively. For fiscal
     1999, USAi's matching contributions for Messrs. Diller, Kaufman and
     Khosrowshahi were $3,712, $1,250 and $4,800, respectively. For fiscal 2000,
     USAi's matching contribution for each of Messrs. Diller, Kaufman,
     Khosrowshahi, Genachowski and Sileck was $5,250.

 (9) Mr. Kaufman was appointed as Vice Chairman of USAi on October 13, 1999.
     Prior to that time, he served in the Office of the Chairman and as Chief
     Financial Officer of USAi and received compensation as such during fiscal
     1999, which is reflected herein.

(10) Includes $187,500 for the 20% discount on the purchase price of USAi shares
     purchased under the 2000 Bonus Stock Purchase Program (described in Note 4
     above).

(11) As of December 31, 2000, Messrs. Kaufman, Khosrowshahi, Genachowski and
     Sileck held 45,000, 55,000, 45,000 and 15,000 shares (after giving effect
     to the Company's two-for-one stock split as of February 10, 2000) of
     restricted stock, respectively. The value of these shares as of
     December 31, 2000 was $874,687.50, $1,069,062.50, $874,687.50 and
     $291,562.50, respectively.

(12) Of this amount, Messrs. Kaufman and Khosrowshahi elected to defer $225,000
     and $60,000, respectively, under USAi's 1998 Bonus Stock Purchase Program.
     Under the 1998 Bonus Stock Purchase Program, in lieu of receiving a cash
     payment for the entire amount of their 1998 bonuses, all bonus eligible
     employees of USAi had a right to elect to purchase shares of common stock
     with up to 50% of the value of their 1998 bonus payments. Employees were
     entitled to purchase these shares at a 20% discount to the then current
     market value of USAi common stock, as determined in accordance with the
     terms of the Program.

(13) Mr. Khosrowshahi was appointed as Executive Vice President, Operations and
     Strategic Planning of USAi on July 24, 2000. Prior to that, he served as
     President of USA Networks Interactive from August 5, 1999 to July 24, 2000.
     From March 2, 1998 until August 5, 1999, Mr. Khosrowshahi served as Vice
     President, Strategic Planning of USAi. Compensation received as President,
     USA Networks Interactive, a division of USAi, during fiscal 1999 and 2000
     is reflected herein. Amount reflected in the 2000 salary column reflect an
     annual base salary of $450,000 from July 24, 2000, when Mr. Khosrowshahi
     became USAi Executive Vice President, Operations and Strategic Planning.

(14) In addition to the options shown in the table, Mr. Khosrowshahi was also
     granted 200,000 options to purchase HRN Class A common stock during 2000
     while he was President, USA Networks Interactive.

(15) Of this amount, Mr. Khosrowshahi elected to defer $15,000 under USAi's 1999
     Bonus Stock Purchase Program. Under the 1999 Bonus Stock Purchase Program,
     in lieu of receiving a cash payment for the entire amount of their 1999
     bonuses, all bonus eligible employees of USAi had a right to elect to
     purchase shares of common stock with up to 50% of the value of their 1999
     bonus payments. Employees were entitled to purchase these shares at a 20%
     discount to the then current market value of USAi common stock, as
     determined in accordance with the terms of the Program.

(16) Mr. Genachowski was appointed as Senior Vice President, General Counsel and
     Secretary on August 9, 2000. Prior to that time, he served as General
     Counsel and Senior Vice President, Business Development of USA Broadcasting
     and Vice President, Corporate Development at Ticketmaster
     Online-Citysearch, Inc., and received compensation as such during fiscal
     2000, which is reflected herein.

(17) Reflects an annual base salary of $300,000 for the period January 1, 2000
     to August 9, 2000 and an annual base salary of $400,000 from August 9, 2000
     through December 31, 2000.

(18) Represents $43,750 for the 20% discount on the purchase price of USAi
     shares purchased under the 2000 Bonus Stock Purchase Program (described in
     Note 4 above) and $51,399 for a housing allowance pursuant to
     Mr. Genachowski's employment agreement.

(19) Mr. Sileck joined USAi as its Senior Vice President and Chief Financial
     Officer on October 12, 1999.

                                       68
<PAGE>
OPTION GRANTS

    The following table presents information with respect to options to purchase
USAi's common stock granted to the Named Executive Officers during the year
ended December 31, 2000. The grants were made under the 2000 Stock and Annual
Incentive Plan ("2000 Incentive Plan").

    The 2000 Incentive Plan is administered by the Compensation/Benefits
Committee and the Performance-Based Compensation Committee, which have the sole
discretion to determine the selected officers, employees and consultants to whom
incentive or non-qualified options, SARs, restricted stock and performance units
may be granted. As to these awards, the Compensation/Benefits Committee and the
Performance-Based Compensation Committee also have the sole discretion to
determine the number, type, exercise price, vesting schedule and other terms,
conditions and restrictions of the grants. The Compensation/Benefits Committee
and the Performance-Based Compensation Committee also retain discretion, subject
to plan limits, to modify the terms of outstanding options and to reprice such
options. The exercise price of an incentive stock option granted under the 2000
Incentive Plan must be at least 100% of the fair market value of USAi's common
stock on the date of grant. In addition, options granted under the 2000
Incentive Plan terminate within ten years of the date of grant. To date, only
non-qualified stock options have been granted under the 2000 Incentive Plan.

                     OPTION/SAR GRANTS IN LAST FISCAL YEAR

<TABLE>
<CAPTION>
                                                                                                          POTENTIAL REALIZABLE
                                                                                                                VALUE AT
                                                                    PERCENT                                  ASSUMED ANNUAL
                                                                   OF TOTAL                               RATES OF STOCK PRICE
                                                    NUMBER OF     OPTIONS TO                                APPRECIATION FOR
                                                   SECURITIES      EMPLOYEES    EXERCISE                         OPTION
                                                   UNDERLYING       GRANTED       PRICE                         TERMS(3)
                                                     OPTIONS        IN THE      PER SHARE   EXPIRATION   ----------------------
NAME                                              GRANTED(#)(1)   FISCAL YEAR   ($/SH)(1)    DATE(2)       5%($)       10%($)
----                                              -------------   -----------   ---------   ----------   ---------   ----------
<S>                                               <C>             <C>           <C>         <C>          <C>         <C>
Barry Diller ...................................          --           --            --            --           --           --
  Chairman and Chief Executive Officer

Victor A. Kaufman ..............................     750,000         5.16%        18.63      12/18/10    8,787,230   22,268,567
  Vice Chairman

Dara Khosrowshahi ..............................      15,000         0.10%        21.69       5/10/10      204,611      518,524
  Executive Vice President, Operations and           300,000         2.06%        24.94       7/24/10    4,705,390   11,924,381
  Strategic Planning(4)                              250,000         1.72%        18.63      12/18/10    2,929,077    7,422,856

Julius Genachowski .............................     200,000         1.38%        21.88        8/9/10    2,752,043    6,974,217
  Senior Vice President, General Counsel and         250,000         1.72%        18.63      12/18/10    2,929,077    7,422,856
  Secretary

Mike Sileck ....................................     100,000         0.69%        21.88       7/18/10    1,376,021    3,487,109
  Senior Vice President and Chief Financial          250,000         1.72%        18.63      12/18/10    2,929,077    7,422,856
  Officer
</TABLE>

------------------------------

(1) These option grants and the related exercise prices reflect the two-for-one
    stock split on USAi stock that became effective for holders of record as of
    the close of business on February 10, 2000.

(2) Options to purchase USAi stock granted during the year ended December 31,
    2000, generally become exercisable in four equal annual installments
    commencing on the first anniversary of the grant date. These options expire
    ten years from the date of grant.

(3) Potential value is reported net of the option exercise price, but before
    taxes associated with exercise. These amounts represent assumed rates of
    appreciation only. Actual gains, if any, on stock option exercises are
    dependent on the future performance of the common stock as well as on the
    option holders' continued employment through the vesting period. The amounts
    reflected in this table may not necessarily be achieved.

(4) Mr. Khosrowshahi was granted options to purchase 100,000 shares of HRN
    Class A common stock on each of February 22, 2000 and April 5, 2000 when he
    was President, USA Networks Interactive. Each grant represented 4.7% of the
    total options granted by HRN during 2000. The options granted February 22,
    2000 have an exercise price of $16.00 per share and become exercisable over
    a four year period, with 25% vesting on the first anniversary of the grant
    date and 1/48 of the options vesting each month thereafter. The options
    granted April 5, 2000 have an exercise price of $15.50 per share and become
    exercisable over a three year period, with 25% vesting on the first and
    second anniversaries of the grant date and the remainder vesting on the
    third anniversary of the grant date. These options expire ten years from the
    date of grant. The potential realizable

                                       69
<PAGE>
    value at assumed rates of stock price appreciation of 5% and 10% are
    $1,006,231 and $2,249,988, respectively, for the February options and
    $974,787 and $2,470,301, respectively, for the April options. See also
    footnote (3) above.

    The table below presents information concerning the exercise of stock
options by the Named Executive Officers during the year ended December 31, 2000,
and the fiscal year-end value of all unexercised options.

                AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
                       AND FISCAL YEAR-END OPTION VALUES

<TABLE>
<CAPTION>
                                                                     NUMBER OF UNEXERCISED         VALUE OF UNEXERCISED
                                                                        OPTIONS HELD AT           IN-THE-MONEY OPTIONS AT
                                                                        YEAR END (#)(1)               YEAR-END($)(2)
                                    ACQUIRED ON        VALUE      ---------------------------   ---------------------------
NAME                               EXERCISE(#)(1)   REALIZED($)   EXERCISABLE   UNEXERCISABLE   EXERCISABLE   UNEXERCISABLE
----                               --------------   -----------   -----------   -------------   -----------   -------------
<S>                                <C>              <C>           <C>           <C>             <C>           <C>
Barry Diller ....................           --              --    45,123,388      4,750,000     579,194,295     46,460,700
  Chairman and Chief Executive
  Officer

Victor A. Kaufman ...............      200,000       3,360,061     1,281,000      1,661,000       9,919,650      4,255,672
  Vice Chairman

Dara Khosrowshahi ...............       30,000         345,000       140,000        885,000         945,000      1,684,375
  Executive Vice President,
  Operations and Strategic
  Planning(3)

Julius Genachowski ..............        4,000          39,750        46,000        500,000         238,750        341,875
  Senior Vice President, General
  Counsel and Secretary

Mike Sileck .....................           --              --        25,000        425,000             585        204,880
  Senior Vice President and Chief
  Financial Officer
</TABLE>

--------------------------

(1) Reflects the two-for-one stock split for USAi stock which became effective
    for holders of record as of the close of business on February 10, 2000.

(2) Represents the difference between $19.4375, the closing price of USAi's
    common stock on December 31, 2000, and the exercise price of the options
    (each, as adjusted to reflect the two-for-one stock split to holders of
    record as of the close of business on February 10, 2000), and does not
    include the U.S. federal and state taxes due upon exercise.

(3) Mr. Khosrowshahi also holds 200,000 options to acquire HRN Class A common
    stock. None of such options are exercisable and the value of such optios at
    year end was $2,525,000, based on the difference between $28.375, the
    closing price of HRN's Class A common stock on December 31, 2000, and the
    exercise price of the options, and does not include the U.S. federal and
    state taxes due upon exercise.

COMPENSATION OF OUTSIDE DIRECTORS

    Each director of USAi who is not an employee of USAi or any of its
subsidiaries receives an annual retainer of $30,000 per year. USAi also pays
each of these directors $1,000 for each USAi or USANi LLC Board meeting and each
USAi or USANi LLC Board committee meeting attended, plus reimbursement for all
reasonable expenses incurred by a director as a result of attendance at any of
these meetings. For the year ended December 31, 2000, the directors that were
designated by Universal and Liberty waived their rights to receive the annual
retainer and attendance fees.

    Under the USAi Directors' Stock Option Plan, directors who are not employees
of USAi or any of its subsidiaries receive a grant of options to purchase 5,000
shares of USAi's common stock upon initial election to office and thereafter
annually on the date of USAi's annual meeting of stockholders at which the
director is re-elected. The exercise price per share of USAi's common stock
subject to the options is the fair market value of USAi's common stock on the
date of grant, which is defined as the

                                       70
<PAGE>
mean of the high and low sale price on the date on any stock exchange on which
the common stock is listed or as reported by NASDAQ or, in the event that the
common stock is not so listed or reported, as determined by an investment
banking firm selected by the Compensation/Benefits Committee. The options vest
in increments of 1,667 shares on each of the first two anniversaries of the date
of grant, and 1,666 shares on the third. The options expire ten years from the
date of grant. For the year ended December 31, 2000, the directors that were
designated by Universal and Liberty waived their rights to receive such option
grants.

    Under USAi's Deferred Compensation Plan for Non-Employee Directors,
non-employee directors may defer all or a portion of their annual retainer fees.
Eligible directors who defer their directors' fees can elect to have such
deferred fees applied to the purchase of share units, representing the number of
share of USAi common stock that could have been purchased on the relevant date,
or to be credited to a cash fund. If any dividends are paid on USAi common
stick, dividend equivalents will be credited on the share units. The cash fund
will be credited with deemed interest at an annual rate equal to the weighted
average prime lending rate of The Chase Manhattan Bank. Upon termination, a
director will receive (1) with respect to share units, such number of shares of
USAi common stock as the share units represent; and (2) with respect to the cash
fund, a cash payment. The payments made upon termination will be either in a
lump sum or in installments, as previously elected by the eligible director at
the time of the related election.

EQUITY COMPENSATION AGREEMENT; EMPLOYMENT AGREEMENTS

    MR. DILLER.  Under the Equity and Bonus Compensation Agreement dated
August 24, 1995, USAi issued and sold to Mr. Diller 883,976 shares of USAi's
common stock at $5.65625 per share in cash (the "Initial Diller Shares") and an
additional 883,976 shares of common stock for the same per share price (the
"Additional Diller Shares") payable by means of a cash payment of $2,210 and an
interest-free, secured, non-recourse promissory note in the amount of
$4,997,779. These amounts have been adjusted as appropriate to reflect the two
two-for-one stock splits to holders of record as of the close of business on
March 12, 1998 and February 10, 2000, respectively. The promissory note is
secured by the Additional Diller Shares and by that portion of the Initial
Diller Shares having a fair market value on the purchase date of 20% of the
principal amount of the promissory note.

    Mr. Diller's Equity and Bonus Compensation Agreement with USAi also provides
for a gross-up payment to be made to Mr. Diller, if necessary, to eliminate the
effect of the imposition of the excise tax under Section 4999 of the Internal
Revenue Code upon payments made to Mr. Diller and imposition of income and
excise taxes on the gross-up payment.

    Mr. Diller was also granted a bonus arrangement, contractually independent
from the promissory note, under which he received a bonus payment of
approximately $2.5 million on August 24, 1996, and was to receive a further such
bonus payment on August 24, 1997, which was deferred. The deferred amount
accrues interest at a rate of 6% per annum. Mr. Diller also received $966,263
for payment of taxes by Mr. Diller due to the compensation expense which
resulted from the difference in the per share fair market value of USAi's common
stock and the per share purchase price of the Initial Diller Shares and
Additional Diller Shares.

    MR. KHOSROWSHAHI.  On July 24, 2000 (the "Effective Date"), USAi and
Mr. Khosrowshahi entered into an amended and restated employment agreement for a
term continuing until March 3, 2003 and providing for an annual base salary of
$450,000 per year. Mr. Khosrowshahi is also eligible to receive an annual
discretionary bonus.

    Mr. Khosrowshahi's employment agreement provides for a grant of options
("USAi Options") to purchase 300,000 shares of USAi's common stock.
Mr. Khosrowshahi's options become exercisable in four equal installments, with
25% vesting on July 24, 2001 and an additional 25% vesting on each of the next
three anniversaries of that date. Upon a change of control of USAi, 100% of

                                       71
<PAGE>
Mr. Khosrowshahi's options become vested and exercisable. Upon termination of
Mr. Khosrowshahi's employment by USAi for any reason other than death,
disability or cause, or if Mr. Khosrowshahi terminates his employment for good
reason, USAi is required to pay Mr. Khosrowshahi his base salary through the
term of his agreement over the course of the then remaining term, subject to
mitigation by Mr. Khosrowshahi. In the event of a termination for any reason
other than death, disability or cause or if Mr. Khosrowshahi terminates his
employment for good reason, Mr. Khosrowshahi's USAi Options and all other
options ("Prior Options") held by him prior to the Effective Date will
immediately vest and they shall remain outstanding for the earlier of one year
from the date of termination and the end of the term of such options. In
addition, if on or prior to December 3, 2002, USAi has not offered
Mr. Khosrowshahi an extension of term until July 25, 2004, the USAi Options,
other than those to vest on July 24, 2004, shall immediately vest and they and
any then outstanding Prior Options shall remain outstanding until March 3, 2004.

    MR. GENACHOWSKI.  On August 9, 2000, USAi and Mr. Genachowski entered into
an employment agreement for a term continuing until September 30, 2002 and
providing for an annual base salary of $400,000 per year. Mr. Genachowski is
also eligible to receive an annual discretionary bonus. Under the agreement,
Mr. Genachowski is entitled to receive an annual housing allowance, plus tax
gross-up for such allowance, not to exceed an aggregate of $100,000.

    Mr. Genachowski's employment agreement provides for a grant of options to
purchase 200,000 shares of USAi's common stock. Mr. Genachowski's options become
exercisable in four equal installments, with 25% vesting on August 9, 2001 and
an additional 25% vesting on each of the next three anniversaries of that date.
Upon a change of control of USAi, 100% of Mr. Genachowski's options become
vested and exercisable. Upon termination of Mr. Genachowski's employment by USAi
for any reason other than death, disability or cause, or if Mr. Genachowski
terminates his employment for good reason, USAi is required to pay
Mr. Genachowski his base salary through the term of his agreement over the
course of the then remaining term and continue the housing allowance for the
remainder of the term, subject, in each case, to mitigation by Mr. Genachowski.
In the event of a termination for any reason other than cause or if
Mr. Genachowski terminates his employment for good reason, Mr. Genachowski's
options that would vest in the 12 months following such termination will vest
immediately and remain exercisable for one year from the date of such
termination.

    MR. SILECK.  On October 12, 1999, USAi and Mr. Sileck entered into a
two-year employment agreement, providing for an annual base salary of $400,000
per year. Mr. Sileck is also eligible to receive an annual discretionary bonus.

    Mr. Sileck's employment agreement provides for a grant of options to
purchase 75,000 shares of USAi's common stock, as adjusted for USAi's
two-for-one stock split to holders of record as of the close of business on
February 10, 2000. Mr. Sileck's options became exercisable with respect to 25%
of the total shares on October 12, 2000, with an additional 25% vesting on each
of the next three anniversaries of that date. Upon a change of control of USAi,
100% of Mr. Sileck's options become vested and exercisable. Mr. Sileck's options
expire upon the earlier to occur of 10 years from the date of grant or 90 days
following the termination of his employment for any reason. In the event that
Mr. Sileck's employment is terminated by USAi for any reason other than cause,
death or disability, USAi is required to pay Mr. Sileck's base salary through
the end of the term of his agreement, subject to mitigation by Mr. Sileck.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

    Messrs. William D. Savoy and Donald R. Keough and Ms. Anne M. Busquet served
as members of the Compensation/Benefits Committee for the entire 2000 calendar
year. None of these directors was ever an officer or employee of USAi or USANi
LLC or their respective subsidiaries.

                                       72
<PAGE>
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

    The following table presents, as of January 31, 2001, information relating
to the beneficial ownership of USAi's common stock by (1) each person known by
USAi to own beneficially more than 5% of the outstanding shares of USAi's common
stock, (2) each director of USAi, (3) each of the Chief Executive Officer and
the four other most highly compensated executive officers of USAi who served in
such capacities as of December 31, 2000 (the "Named Executive Officers"), and
(4) all executive officers and directors of USAi as a group. The table also
presents, as of January 31, 2001, information relating to the beneficial
ownership of shares of Class A common stock of Hotel Reservations
Network, Inc., a subsidiary of USAi ("HRN"), shares of Class A common stock of
Styleclick, Inc., a subsidiary of USAi ("Styleclick"), and shares of Class B
common stock of Ticketmaster, a subsidiary of USAi ("TM"), by (1) each director
of USAi, (2) each of the Named Executive Officers, and (3) all executive
officers and directors of USAi as a group.

    Unless otherwise indicated, beneficial owners listed here may be contacted
at USAi's corporate headquarters address, 152 West 57th Street, New York, New
York 10019. For each listed person, the number of shares of USAi common stock,
HRN Class A common stock, Styleclick Class A common stock, TM Class B common
stock and percent of each such class listed assumes the conversion of any shares
of USAi Class B common stock, HRN Class B common stock, Styleclick Class B
common stock and TMCS Class A common stock owned by such person, but does not
assume the conversion of those shares by any other person. Shares of USAi
Class B common stock may at the option of the holder be converted on a
one-for-one basis into shares of USAi common stock. Shares of HRN Class B common
stock may at the option of the holder be converted on a one-for-one basis into
shares of HRN Class A common stock. Shares of Styleclick Class B common stock
may at the option of the holder be converted on a one-for-one basis into shares
of Styleclick Class A common stock. Shares of TM Class A common stock may at the
option of the holder be converted on a one-for-one basis into shares of TM
Class B common stock. Under the rules of the Securities and Exchange Commission,
a person is deemed to be a beneficial owner of a security if that person has or
shares voting power, which includes the power to vote or to direct the voting of
such security, or investment power, which includes the power to dispose of or to
direct the disposition of such security. A person is also deemed to be the
beneficial owner of any securities of which that person has the right to acquire
beneficial ownership within 60 days. Under these rules, more than one person may
be deemed to be a beneficial owner of the same securities and a person may be
deemed to be a beneficial owner of securities as to which that person has no
economic interest. For each listed person, the number of shares and percent of
class listed includes shares of USAi common stock, HRN Class A common stock,
Styleclick Class A common stock and TM Class B common stock that may be acquired
by such person upon exercise of stock options that are or will be exercisable
within 60 days of January 31, 2001.

    The percentage of votes for all classes of USAi common stock is based on one
vote for each share of USAi common stock and ten votes for each share of USAi
Class B common stock. These figures do not include any unissued shares of USAi
common stock or USAi Class B common stock issuable upon conversion of Liberty's
Home Shopping Network, Inc. ("Holdco") shares and USANi LLC shares beneficially
owned by Liberty or Vivendi Universal. The percentage of votes for all classes
of HRN common stock is based on one vote for each share of HRN Class A common
stock and 15 votes for each share of HRN Class B common stock. The percentage of
votes for all classes of Styleclick common stock is based on one vote for each
share of Styleclick Class A common stock and 15 votes for each share of
Styleclick Class B common stock. The percentage of votes for all classes of TM
common

                                       73
<PAGE>
stock is based on 15 votes for each share of TM Class A common stock and one
vote for each of TM Class B common stock.

<TABLE>
<CAPTION>
                                                                    NUMBER OF        PERCENT    PERCENT OF VOTES
NAME AND ADDRESS OF BENEFICIAL OWNER            TITLE OF CLASS       SHARES          OF CLASS    (ALL CLASSES)
------------------------------------          ------------------   -----------       --------   ----------------
<S>                                           <C>                  <C>               <C>        <C>
Capital Research & Management Co. ..........  USAi common           21,988,530(1)       7.2%           2.2%
  333 South Hope Street
  Los Angeles, CA 90071

Liberty Media Corporation ..................  USAi common           74,442,234(2)(3)   21.0%          55.7%
  9197 South Peoria Street
  Englewood, CO 80112

Vivendi Universal S.A ......................  USAi common           31,611,308(4)       9.9%          16.3%
  42, Avenue Friedland
  75380 Paris cedex 08/France

Barry Diller................................  USAi common          153,448,380(2)(5)   37.1%          73.5%
                                              HRN Class A                   --(6)         *              *
                                              Styleclick Class A            --(7)         *              *
                                              TM Class B                    --(8)         *              *

Paul Allen..................................  USAi common           30,207,361(9)       9.9%           3.2%
                                              HRN Class A                   --            *              *
                                              Styleclick Class A            --            *              *
                                              TM Class B               105,622(10)        *              *

Edgar J. Bronfman, Jr.......................  USAi common                   --            *              *
                                              HRN Class A                   --            *              *
                                              Styleclick Class A            --            *              *
                                              TM Class B                    --            *              *

Anne M. Busquet.............................  USAi common               12,333(11)        *              *
                                              HRN Class A                   --            *              *
                                              Styleclick Class A            --            *              *
                                              TM Class B                    --            *              *

Julius Genachowski..........................  USAi common               91,917(12)        *              *
                                              HRN Class A                   --            *              *
                                              Styleclick Class A            --            *              *
                                              TM Class B                   700            *              *

Philippe Germond............................  USAi common                   --            *              *
                                              HRN Class A                   --            *              *
                                              Styleclick Class A            --            *              *
                                              TM Class B                    --            *              *

Dara Khosrowshahi...........................  USAi common              284,122(13)        *              *
                                              HRN Class A               52,083(14)        *              *
                                              Styleclick Class A            --            *              *
                                              TM Class B                    --            *              *

Victor A. Kaufman...........................  USAi common            1,396,338(15)        *              *
                                              HRN Class A                   --            *              *
                                              Styleclick Class A            --            *              *
                                              TM Class B                    --            *              *

Donald R. Keough............................  USAi common              161,341(16)        *              *
                                              HRN Class A                   --            *              *
                                              Styleclick Class A            --            *              *
                                              TM Class B                    --            *              *

Georg Kofler................................  USAi common            1,100,000(17)        *              *
                                              HRN Class A                   --            *              *
                                              Styleclick Class A            --            *              *
                                              TM Class B                    --            *              *
</TABLE>

                                       74
<PAGE>

<TABLE>
<CAPTION>
                                                                    NUMBER OF        PERCENT    PERCENT OF VOTES
NAME AND ADDRESS OF BENEFICIAL OWNER            TITLE OF CLASS       SHARES          OF CLASS    (ALL CLASSES)
------------------------------------          ------------------   -----------       --------   ----------------
<S>                                           <C>                  <C>               <C>        <C>
Marie-Josee Kravis..........................  USAi common                   --            *              *
                                              HRN Class A                   --            *              *
                                              Styleclick Class A            --            *              *
                                              TM Class B                    --            *              *

Pierre Lescure..............................  USAi common                   --            *              *
                                              HRN Class A                   --            *              *
                                              Styleclick Class A            --            *              *
                                              TM Class B                    --            *              *

Jean-Marie Messier..........................  USAi common                   --            *              *
                                              HRN Class A                   --            *              *
                                              Styleclick Class A            --            *              *
                                              TM Class B                    --            *              *

William D. Savoy............................  USAi common               53,333(18)        *              *
                                              HRN Class A                   --            *              *
                                              Styleclick Class A            --            *              *
                                              TM Class B                14,166(19)        *              *

Gen. H. Norman Schwarzkopf..................  USAi common              162,333(20)        *              *
                                              HRN Class A                   --            *              *
                                              Styleclick Class A            --            *              *
                                              TM Class B                    --            *              *

Michael Sileck..............................  USAi common               40,000(21)        *              *
                                              HRN Class A                1,500            *              *
                                              Styleclick Class A            --            *              *
                                              TM Class B                    --            *              *

Diane Von Furstenberg.......................  USAi common                5,833(22)        *              *
                                              HRN Class A                   --(22)        *              *
                                              Styleclick Class A            --(22)        *              *
                                              TM Class B                    --(22)        *              *

All executive officers and directors as a
  group (17 persons)........................  USAi common          186,963,291         44.8%          76.6%
                                              HRN Class A               53,583            *              *
                                              Styleclick Class A            --            *              *
                                              TM Class B               120,488            *              *
</TABLE>

--------------------------

  * The percentage of shares beneficially owned does not exceed 1% of the class.

 (1) Based upon information filed with the Securities and Exchange Commission by
     Capital Research & Management Co. as of December 31, 2000.

 (2) Liberty, Universal, Vivendi Universal (as the successor to The Seagram
     Company Ltd.), the parent of Universal, USAi and Mr. Diller are parties to
     a stockholders agreement under which Liberty and Mr. Diller have formed
     BDTV INC., BDTV II INC., BDTV III INC. and BDTV IV INC. (collectively, the
     "BDTV Entities") which entities, as of January 31, 2001, held 8,000,000,
     31,236,444, 8,010,364 and 1,600,000 shares of USAi Class B common stock,
     respectively, and an aggregate of 44 shares of USAi common stock
     collectively. Mr. Diller generally has the right to vote all of the shares
     of USAi common stock and USAi Class B common stock held by the BDTV
     Entities, and the shares of USAi common stock and USAi Class B common stock
     held by Universal and Liberty.

 (3) Consists of 24,838,738 shares of USAi common stock and 756,644 shares of
     USAi Class B common stock held by Liberty as to which Mr. Diller has
     general voting power and 44 shares of USAi common stock and 48,846,808
     shares of USAi Class B common stock held by the BDTV Entities. These shares
     are subject to the stockholders agreement.

 (4) Consists of 18,181,308 shares of USAi common stock and 13,430,000 shares of
     USAi Class B common stock held by Vivendi Universal. These shares are
     subject to the stockholders agreement.

                                       75
<PAGE>
 (5) Consists of 2,209,908 shares of USAi common stock owned by Mr. Diller,
     options to purchase 45,123,388 shares of USAi common stock granted under
     USAi's stock option plans, 61,542 shares of USAi common stock held by a
     private foundation as to which Mr. Diller disclaims beneficial ownership,
     44 shares of USAi common stock and 48,846,808 shares of USAi Class B common
     stock held by the BDTV Entities, 24,838,738 shares of USAi common stock and
     756,644 shares of USAi Class B common stock which are held by Liberty, and
     18,181,308 shares of USAi common stock and 13,430,000 shares of USAi
     Class B common stock, which are held by Universal and otherwise
     beneficially owned by Vivendi Universal, as to which Mr. Diller has general
     voting authority under the stockholders agreement. Excludes options to
     purchase 5,833 shares of USAi common stock held by Ms. Von Furstenberg, as
     to which Mr. Diller disclaims beneficial ownership.

 (6) Excludes 38,999,100 shares of HRN Class B common stock owned by USAi, as to
     which Mr. Diller disclaims beneficial ownership. These shares are
     convertible into an equal number of shares of HRN Class A common stock.

 (7) Excludes 23,153,713 shares of Styleclick Class B common stock owned by
     USAi, as to which Mr. Diller disclaims beneficial ownership. These shares
     are convertible into an equal number of shares of Styleclick Class A common
     stock.

 (8) Excludes 95,782,544 shares of TM Class A common stock owned by USAi, as to
     which Mr. Diller disclaims beneficial ownership. These shares are
     convertible into an equal number of shares of TM Class B common stock.

 (9) Consists of 30,144,028 shares of USAi common stock and options to purchase
     63,333 shares of USAi common stock granted under USAi's stock option plans.

(10) Consists of 95,622 shares of TM Class B common stock held by Mr. Allen and
     10,000 shares of TM Class B common stock held by Vulcan Ventures, Inc.

(11) Consists of 4,000 shares of USAi common stock and options to purchase 8,333
     shares of USAi common stock granted under USAi's stock option plans.

(12) Consists of 917 shares of USAi common stock, 45,000 shares of USAi
     restricted stock and options to purchase 46,000 shares of USAi common stock
     granted under USAi's stock option plans.

(13) Consists of 4,122 shares of USAi common stock, 55,000 shares of USAi
     restricted stock and options to purchase 225,000 shares of USAi common
     stock granted under USAi's stock option plans.

(14) Consists of options to purchase 52,083 shares of HRN Class A common stock
     granted under HRN's stock option plans.

(15) Consists of 34,338 shares of USAi common stock, 45,000 shares of USAi
     restricted stock and options to purchase 1,317,000 shares of USAi common
     stock granted under USAi's stock option plans.

(16) Consists of 84,676 shares of USAi common stock and options to purchase
     76,665 shares of USAi common stock granted under USAi's stock option plans.
     Excludes 3,079,056 shares of USAi common stock beneficially owned, as of
     December 31, 2000, by Allen & Co., for which Mr. Keough serves as Chairman.
     Mr. Keough disclaims beneficial ownership of such shares.

(17) Consists of options to purchase 1,100,000 shares of USAi common stock
     granted under USAi's stock plans.

(18) Consists of 10,000 shares of USAi common stock and options to purchase
     43,333 shares of USAi common stock granted under USAi's stock option plans.

(19) Consists of 10,000 shares of TM Class B common stock and options to
     purchase 4,166 shares of TM Class B common stock granted under TM's stock
     option plans.

(20) Consists of options to purchase 162,333 shares of USAi common stock granted
     under USAi's stock option plans.

(21) Consists of 15,000 shares of USAi restricted stock and options to purchase
     25,000 shares of USAi common stock granted under USAi's stock option plans.

(22) Consists of options to purchase 5,833 shares of USAi common stock granted
     under USAi's stock option plans. Excludes shares beneficially owned by
     Mr. Diller, as to which Ms. Von Furstenberg disclaims beneficial ownership.

                                       76
<PAGE>
    The following table presents, as of January 31, 2001, information relating
to the beneficial ownership of USAi's Class B common stock:

<TABLE>
<CAPTION>
                                                              NUMBER OF    PERCENT
NAME AND ADDRESS OF BENEFICIAL OWNER                            SHARES     OF CLASS
------------------------------------                          ----------   --------
<S>                                                           <C>          <C>
Barry Diller(1).............................................  63,033,452      100%
  c/o USA Networks, Inc. 152 West 57th Street New York, NY
    10019

Liberty Media Corporation(1)(2).............................  49,603,452     78.7%
  9197 South Peoria Street Englewood, CO 80112

BDTV Entities(1)(2).........................................  48,846,808     77.5%
  (includes BDTV INC., BDTV II INC., BDTV III INC. and BDTV
    IV INC.)
  8800 West Sunset Boulevard West Hollywood, CA 90069

Vivendi Universal S.A.(3)...................................  13,430,000     21.3%
  42, Avenue de Friedland 75380 Paris cedex 08/France
</TABLE>

------------------------

(1) These figures do not include any unissued shares of common stock or Class B
    common stock issuable upon conversion of Liberty's Holdco shares and USANi
    LLC shares beneficially owned by Liberty or Seagram.

(2) Liberty, Universal, Vivendi Universal (as the successor to The Seagram
    Company Ltd.), the parent of Universal, USAi and Mr. Diller are parties to
    the stockholders agreement, under which Liberty and Mr. Diller have formed
    the BDTV Entities which entities hold 8,000,000, 31,236,444, 8,010,364 and
    1,600,000 shares of Class B common stock, respectively. Mr. Diller generally
    has the right to vote all of the shares of Class B common stock held by the
    BDTV Entities and the shares of Class B common stock held by Universal and
    Liberty. Mr. Diller owns all of the voting stock of the BDTV Entities and
    Liberty owns all of the non-voting stock, which non-voting stock represents
    in excess of 99% of the equity of the BDTV Entities.

(3) Mr. Diller generally votes all of the shares held by Vivendi Universal under
    the terms of the stockholders agreement.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

    Mr. Diller, the Chairman of the Board and Chief Executive Officer of USAi,
is the sole holder of the voting stock of the BDTV Entities. The BDTV Entities
hold shares of USAi common stock and Class B common stock, which have effective
voting control of USAi with respect to all matters submitted for the vote or
consent of stockholders as to which stockholders vote together as a single
class.

    In 1997, USAi and Mr. Diller agreed to defer repayment of an interest-free,
secured, non-recourse promissory note in the amount of $4,997,779 due from
Mr. Diller from September 5, 1997 to September 5, 2007. As of December 31, 2000,
the promissory note remained outstanding. In 1997, Mr. Diller and USAi agreed to
defer the payment of a bonus in the amount of $2.5 million that otherwise was to
be paid to Mr. Diller in 1997. The deferred bonus amount accrues interest at a
rate of 6% per annum.

    In anticipation of the sale of the aircraft previously leased by USAi, in
1999 USAi and Nineteen Forty CC Inc. ("Ninteen Forty") acquired rights to a
second aircraft (the "Aircraft") also for use by Mr. Diller and other directors
and executive officers of USAi and USANi LLC in connection with USAi's and USANi
LLC's business. USAi assigned all of its rights under the purchase agreement to
a third party that purchased the Aircraft for approximately $22 million and
leased it to USAi under a seven-year lease with an option to purchase the
Aircraft. On October 16, 2000, USAi assigned its interest to purchase a 77.2%
interest in the Aircraft to a wholly-owned subsidiary of USAi, and Nineteen
Forty exercised its option to acquire a 22.8% interest in the Aircraft. After
refurbishment of

                                       77
<PAGE>
the Aircraft at a cost of approximately $5 million, on November 1, 2000,
Nineteen Forty and the USAi subsidiary paid the third party leasing company
aggregate consideration of $27,066,426 to exercise their option to purchase the
Aircraft.

    In 2000, USAi, through Home Shopping Network, paid approximately $936,778 to
Diane Von Furstenberg Studio L.P., of which Ms. Von Furstenberg, currently a
member of the Board of Directors, is the founder and Chairman. Such payment was
made in connection with goods offered for sale on Home Shopping Network's
programming services.

UNIVERSAL TRANSACTION

    On February 12, 1998, the Company completed the Universal transaction, in
which USAi acquired USA Networks, a New York partnership (which consisted of USA
Network and Sci-Fi Channel cable television networks), and the domestic
television production and distribution business ("Studios USA") of Universal
from Universal. Universal is controlled by Vivendi Universal. See "Relationship
between USAi and Universal". USAi paid Universal approximately $1.6 billion in
cash ($300 million of which was deferred with interest) and an effective 45.8%
interest in USAi through shares of common stock, Class B common stock and shares
of USANi LLC, a Delaware limited liability company ("USANi LLC"). The USANi LLC
shares are exchangeable for shares of common stock and Class B common stock on a
one-for-one basis.

    Due to Federal Communication Commission ("FCC") restrictions on foreign
ownership of entities such as USAi that control domestic television broadcast
licenses, Universal, which is controlled by Vivendi Universal, a French company,
is limited in the number of shares of USAi's stock that it may own. USAi formed
USANi LLC primarily to hold USAi's non-broadcast businesses in order to comply
with such FCC restrictions and for other tax and regulatory reasons. Universal's
interest in USANi LLC is not subject to the FCC foreign ownership limitations.
USAi maintains control and management of USANi LLC, and the businesses held by
USANi LLC are managed by USAi in substantially the same manner as they would be
if USAi held them directly through wholly owned subsidiaries.

    In connection with the Universal transaction, USAi, Vivendi Universal
(successor to The Seagram Company Ltd.), Universal, Liberty and Mr. Diller
entered into various transaction agreements, including the following:

    - an investment agreement, pursuant to which, among other things, (1) each
      of Universal and Liberty were granted a preemptive right, subject to
      limitations, to maintain their respective percentage ownership interests
      in USAi in connection with future issuances of USAi capital stock and
      (2) with respect to issuances of USAi capital stock in specified
      circumstances, Universal is obligated to maintain the percentage ownership
      interest in USAi that it had prior to the issuances;

    - a governance agreement which, among other things, (1) details restrictions
      on the acquisitions of additional USAi securities, on the transfer of USAi
      securities and other conduct restrictions, in each case, applicable to
      Universal and (2) governs Universal's and Liberty's rights to
      representation on the USAi Board of Directors and Liberty's, Universal's
      and Mr. Diller's right to approve certain fundamental changes by USAi or
      any USAi subsidiary;

    - a stockholders agreement which, among other things, governs the ownership,
      voting, transfer or other disposition of USAi securities owned by
      Universal, Liberty and Mr. Diller and their respective affiliates, and
      under which Mr. Diller exercises voting control over the equity securities
      of USAi held by these persons and their affiliates; and

    - a spinoff agreement which, in the event Mr. Diller no longer serves as
      Chief Executive Officer of USAi or becomes disabled, generally provides
      for interim arrangements relating to management of USAi and efforts to
      achieve a spinoff or sale of USAi's broadcast stations and, in the case of
      a spinoff, arrangements relating to their respective rights in USAi
      resulting from the spinoff.

                                       78
<PAGE>
    Summaries of these agreements are set forth in USAi's Annual Report on
Form 10-K for the year ended December 31, 1998. Furthermore, copies of these
agreements have been filed with the Securities and Exchange Commission as
Appendices A through D to USAi's Definitive Proxy Statement, dated January 12,
1998, and are available from the Securities and Exchange Commission.

POLYGRAM FILMED ENTERTAINMENT AND OCTOBER FILMS TRANSACTIONS

    In May 1999, USAi acquired from an affiliate of Universal certain assets and
liabilities relating to the domestic (including Canada) motion picture and home
video distribution businesses of PolyGram Filmed Entertainment, Inc., including
such businesses as conducted by Gramercy Pictures, Interscope Communications and
Propaganda Films. The consideration in the transaction consisted of the
assumption by USAi of certain liabilities of the acquired businesses. In
addition, in connection with the transaction, USAi and Universal entered into
various related agreements, including:

    - a domestic distribution agreement relating to certain PolyGram films,
      pursuant to which USAi has the exclusive right to distribute in the United
      States and Canada these films in theatres, on television and on video for
      a fee;

    - a $200 million interest-bearing promissory note, pursuant to which USAi
      loaned to Universal the face amount of the note, which is a recourse note
      and is payable out of the revenues otherwise due Universal under the
      distribution agreement; and

    - other ancillary agreements, relating to videogram fulfillment, music
      administration and transitional services.

    USAi believes that the terms of the PolyGram transaction are at least as
favorable to USAi as the terms that would have been obtained from an unrelated
third party.

    In addition, in May 1999, USAi acquired 100% of the capital stock of OFI
Holdings, Inc., which owns the business of October Films. Universal was the
majority shareholder in OFI. In the transaction, the minority shareholders of
OFI received an aggregate of $12 million in respect of their equity interest in
OFI, Universal received 600,000 shares of USAi common stock in respect of its
interest, and Universal also purchased 600,000 shares of USAi common stock for
an aggregate purchase price of $12 million. The market price of USAi common
stock was $18.75 per share on the trading day immediately prior to the date the
OFI merger agreement was executed. The foregoing share numbers and market price
have been adjusted as appropriate to reflect the two-for-one stock split to
holders of record as of the close of business on February 10, 2000. The terms of
this transaction were negotiated by USAi, Universal and a special committee of
independent directors of OFI and their respective advisors.

RELATIONSHIP BETWEEN USAI AND UNIVERSAL

    Under the Universal transaction, USAi and some of its subsidiaries entered
into business agreements with Universal and some of its subsidiaries relating
to, among other things: (1) the domestic distribution by USAi of
Universal-produced television programming and Universal's library of television
programming; (2) the international distribution by Universal of television
programming produced by Studios USA; (3) long-term arrangements relating to the
use by Studios USA of Universal's production facilities in Los Angeles and
Orlando, Florida; and (4) a joint venture relating to the development of
international general entertainment television channels.

    As part of the Universal transaction, Universal and USAi agreed to form a
50-50 joint venture to be managed by Universal which would own, operate and
exploit the international development of USA Network, Sci-Fi Channel and
Universal's action/adventure channel, "13th Street". USAi elected to have
Universal buy out its 50% interest in this venture. Accordingly, during the
first half of 1999, USANi LLC reversed amounts previously recorded for its share
of losses of the joint venture.

                                       79
<PAGE>
    Universal, through its ownership of USAi stock and USANi LLC shares, is
USAi's largest stockholder, assuming conversion of Universal's LLC Shares that
is not currently permissible under FCC rules. In December 2000, Vivendi S.A.,
The Seagram Company Ltd. and Canal Plus combined to form a new company, named
Vivendi Universal S.A. Universal was a subsidiary of Seagram and is now a
subsidiary of Vivendi Universal. Messrs. Bronfman, Germond, Lescure and Messier
are members of the Boards of Directors of USAi and USANi LLC and hold director
and executive positions with Vivendi Universal and its affiliates. These
individuals were elected to the Boards of Directors of USAi and USANi LLC under
the transaction agreements relating to the Universal transaction. Other than in
their capacities as stockholders and officers of Vivendi Universal or Universal,
and as directors and stockholders of USAi and USANi LLC, these individuals do
not have any direct or indirect interest in the Universal-USAi agreements.

    As described above, in May 1999, USAi and Universal entered into certain
agreements relating to the PolyGram Filmed Entertainment and October Films
transactions.

    USAi and USANi LLC believe that their business agreements with Universal
entered into as part of these transactions are all on terms at least as
favorable to USAi and USANi LLC as terms that could have been obtained from an
independent third party.

    In the ordinary course of business, USAi and USANi LLC may determine to
enter into other agreements with Vivendi Universal and its affiliates.

EXERCISE OF PREEMPTIVE RIGHTS

    In May 2000, pursuant to the investment agreement, Liberty exercised
preemptive rights to acquire Company capital stock (as adjusted as appropriate
to reflect the two-for-one stock split to holders of record as of the close of
business on February 10, 2000) with respect to the issuance of 24,344,675 shares
of common stock in connection with the acquisition of Precision Response
Corporation. Liberty exercised its preemptive rights option to acquire 7,920,274
shares of common stock for an aggregate consideration of $179,092,374, or $22.61
per share.

RELATIONSHIP BETWEEN USAI AND LIBERTY

    Liberty is an indirect wholly-owned subsidiary of AT&T Corp. ("AT&T")
through a merger in March 1999 in which Tele-Communications, Inc. (now called
AT&T Broadband) became a subsidiary of AT&T. As a result of this merger and
certain governance provisions implemented at the time of the merger, based on
information publicly reported by Liberty, neither AT&T nor AT&T Broadband is
deemed to be the beneficial owner of securities of USAi owned by Liberty.

    USAi and USANi LLC subsidiaries in the ordinary course of business enter
into agreements with AT&T and its subsidiaries relating to, among other things,
the carriage of the USA Cable's networks, the Home Shopping Network and
America's Store programming and the acquisition of, or other investment in,
businesses related to the businesses of USAi and USANi LLC, all of which have
been negotiated on an arm's-length basis.

    Currently, none of the members of USAi's Board of Directors is affiliated
with, or has been designated by, Liberty. Under the agreements relating to the
Universal transaction, two designees of Liberty, Messrs. Malone and Bennett, are
members of the USANi LLC Board of Directors. Liberty holds a substantial equity
interest in USAi and USANi LLC, and Liberty is a party to the Universal
transaction agreements filed as exhibits to USAi's publicly filed reports.

    During April 1996, Home Shopping Network sold a majority of its interest in
HSN Direct Joint Venture, its infomercial operation, for $5.9 million to
entities controlled by Flextech P.L.C., a company controlled by Liberty. In each
of February 1998, 1999, 2000 and 2001 Flextech paid Home Shopping Network a
$250,000 installment of the purchase price. Home Shopping Network retains a 15%
interest in the venture and a related corporation.

                                       80
<PAGE>
    During 1996, Home Shopping Network, along with Jupiter Programming Company,
formed Shop Channel, a television shopping venture based in Tokyo. Liberty Media
International, Inc., a subsidiary of Liberty, owns a 50% interest in Jupiter,
the 70% shareholder in the venture. Home Shopping Network owns a 30% interest in
Shop Channel. During 1999, Home Shopping Network loaned $2.5 million to Shop
Channel, of which $2.1 million was outstanding at December 31, 2000. In
addition, Home Shopping Network sold inventory and provided services in the
amount of $722,000 to Shop Channel during 2000.

    USAi and USANi LLC believe that their business agreements with Liberty have
been negotiated on an arm's-length basis and contain terms at least as favorable
to USAi and USANi LLC as those that could be obtained from an unaffiliated third
party.

    In the ordinary course of business, and otherwise from time to time, USAi
and USANi LLC may determine to enter into other agreements with Liberty and its
affiliates.

RELATIONSHIP BETWEEN USAI AND MR. KOFLER

    On December 17, 1999, USAi entered into an agreement with Thomas and Leo
Kirch and Georg Kofler pursuant to which each agreed to cooperate with each
other to pursue on an exclusive basis televised shopping and related e-commerce
opportunities in Europe and to consider pursuing other media opportunities
subject to preexisting obligations. The parties also agreed to consolidate their
joint teleshopping and electronic commerce businesses in Europe and form
entities to pursue electronic commerce and teleshopping opportunities on the
basis of a mutually agreed ownership structure pursuant to which Mr. Kofler
would be entitled to 26.725% of any entity formed by the partners. Mr. Kofler
has agreed to be responsible for the exploration of business opportunities in
Europe, the development of entities to pursue such opportunities and the
selection of management for such entities for which USAi has agreed to pay
Kofler $1 million annually during the five (5) year term of the agreement.

    Mr. Kofler and HSN are also parties to a shareholders agreement relating to
the shares in H.O.T. Home Order Television AG ("HOT Germany") owned by them
which, among other things, provides that Mr. Kofler will vote his shares in HOT
Germany as directed by HSN for the election of a majority of the members of the
Supervisory Board of HOT Germany. HSN has agreed to vote its interest in HOT
Germany as directed by Mr. Kofler with respect to the election of three members
of the HOT Germany Supervisory Board, the election of Mr. Kofler as Chairman of
the Supervisory Board and the commencement of an initial public offering for HOT
Germany. HSN has agreed to purchase Mr. Kofler's HOT Germany stock at a price
not to exceed $50 million in the event a pledgee of such shares seeks to sell
the shares. Kofler has also granted HSN a right of first refusal with respect to
his shares in HOT Germany. Mr. Kofler and his wife own 15% of the stock of HOT
Germany. Mr. Kofler also is a party to an employment agreement with a German
affiliate of HSN and was granted an option to purchase 4,400,000 shares of USAi
Common Stock pursuant to such agreement. The option will vest ratably over four
(4) years and must be exercised not later than ten (10) years following the
grant date. The exercise price of the option was the fair market value of USAi
Common Stock on the date of grant. Under the employment agreement, Kofler will
be paid Thirty Thousand Dollars ($30,000) annually for a two (2) year term. The
term of the employment agreement will renew for an additional two (2) years
unless notice is given by either party at least twelve (12) months prior to the
end of the initial term.

    Mr. Kofler also has ownership interests in several entities which are
developing or operating televised shopping and related electronic businesses in
various European jurisdictions and in which HSN or its affiliates also have
ownership interests. In each case, HSN or its affiliate has contributed capital
and in certain instances has agreed to make services and products available to
such entities. We expect that the interests of HSN and Mr. Kofler in these
entities will, to the extent permitted by applicable law, be consolidated with
those of Thomas and Leo Kirch on terms to be agreed upon by Messrs. Kofler,
Thomas and Leo Kirch and USAi.

                                       81
<PAGE>
                                    PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a) List of Documents filed as part of this Report

(1)--USANi LLC and Subsidiaries (including Predecessor Company) Financial
    Statements

       Report of Independent Auditors--Ernst & Young LLP.

       Consolidated Statement of Operations for the Years Ended December 31,
       2000, 1999 and 1998.

       Consolidated Balance Sheets as of December 31, 2000 and 1999.

       Consolidated Statement of Members' Equity for the Years Ended
       December 31, 2000, 1999 and 1998.

       Consolidated Statements of Cash Flows for Years Ended December 31, 2000,
       1999 and 1998.

       Notes to Consolidated Financial Statements.

<TABLE>
<CAPTION>
      SCHEDULE                                                                          PAGE
       NUMBER                                                                          NUMBER
---------------------                                                                 --------
<C>                     <S>                                                           <C>
         II             Valuation and Qualifying Accounts...........................     91
</TABLE>

       All other financial statements and schedules not listed have been omitted
       since the required information is included in the Consolidated Financial
       Statements or the notes thereto, or is not applicable or required.

(5)--Exhibits (numbered in accordance with Item 601 of Regulation S-K)

<TABLE>
<CAPTION>
       EXHIBIT
       NUMBER                                   DESCRIPTION                            NUMBER
---------------------   ------------------------------------------------------------  --------
<C>                     <S>                                                           <C>
         2.1            Agreement and Plan of Exchange and Merger, dated as of
                        August 25, 1996, by and among Silver King Communications,
                        Inc., HouseAcquisition Corp., Home Shopping Network, Inc.
                        and Liberty HSN,Inc., filed as Appendix B to USAi's
                        Definitive Proxy Statement, dated November 20, 1996, is
                        incorporated herein by reference.
         2.2            Agreement and Plan of Merger by and among Silver King
                        Communications, Inc., Thames Acquisition Corporation and
                        Savoy Pictures Entertainment, Inc., as amended and restated
                        as of August 13, 1996, filed as Appendix A to USAi's
                        Definitive Proxy Statement, dated November 20, 1996, is
                        incorporated herein by reference.
         2.3            Investment Agreement, dated as of October 19, 1997, among
                        Universal Studios, Inc., HSN, Inc., Home Shopping Network,
                        Inc. and Liberty Media Corporation, as amended and restated
                        as of December 18, 1997, filed as Appendix A to USAi's
                        Definitive Proxy Statement, dated January 12, 1998, is
                        incorporated herein by reference.
         3.1            Restated Certificate of Incorporation of USAi filed as
                        Exhibit 3.1 to USAi's Quarterly Report on Form 10-Q for the
                        fiscal quarter ended June 30, 2000, is incorporated herein
                        by reference.
         3.2            Amended and Restated By-Laws of USAi filed as Exhibit 3.1 to
                        USAi's Form 8-K, dated January 9, 1998, is incorporated
                        herein by reference.
         3.3            Certificate of Formation of USANi LLC, filed as Exhibit 3.3
                        to USANi LLC's Registration Statement on Form S-4, dated
                        January 27, 1999, is incorporated herein by reference.
</TABLE>

                                       82
<PAGE>

<TABLE>
<CAPTION>
       EXHIBIT
       NUMBER                                   DESCRIPTION                            NUMBER
---------------------   ------------------------------------------------------------  --------
<C>                     <S>                                                           <C>
         3.4            Amended and Restated Limited Liability Company Agreement of
                        USANi LLC, filed as Exhibit 10.59 to USAi's Annual Report on
                        From 10-K for the fiscal year ended December 31, 1997, is
                        incorporated herein by reference.
         4.1            Indenture, dated as of November 23, 1998, among USAi, USANi
                        LLC, the Guarantors party thereto, and The Chase Manhattan
                        Bank, as Trustee, filed as Exhibit 4.1 to USAi's
                        Registration Statement on Form S-4 (No. 333-71305) (the
                        "S-4"), is incorporated herein by reference.
         4.2            Form of 6 3/4% Senior Notes due 2005 (included as Exhibit B
                        to Exhibit 4.1 to USAi's S-4).
         4.3            Exchange and Registration Rights Agreement, dated as of
                        November 23, 1998, among USAi, USANi LLC, the Guarantors
                        party thereto, and Chase Securities Inc., Bear, Stearns &
                        Co. Inc., BNY Capital Markets, Inc. and NationsBanc
                        Montgomery Securities LLC, filed as Exhibit 4.3 to the S-4
                        is incorporated herein by reference.
         4.4            Indenture, dated as of June 25, 1993, for the Savoy 7%
                        Convertible Subordinated Debentures due July 1, 2003, filed
                        as Exhibit 4(d) to Savoy's S-1 Registration Statement No.
                        33-63192, is incorporated herein by reference.
         4.5            First Supplemental Indenture, dated as of October 24, 1993,
                        for the Savoy 7% Convertible Debentures due July 1, 2003,
                        filed as Exhibit 4(e) to Savoy's S-1 Registration Statement
                        No. 33-70160, is incorporated herein by reference.
         4.6            Second Supplemental Indenture, dated as of December 17,
                        1993, for the Savoy 7% Convertible Debentures due July 1,
                        2003, filed as Exhibit 4(e) to Savoy's Annual Report on Form
                        10-K for the fiscal year ended December 31, 1993, is
                        incorporated herein by reference.
         4.7            Third Supplemental Indenture, dated as of December 19, 1996,
                        for the Savoy 7% Convertible Debentures due July 1, 2003
                        filed as Exhibit 4.1 to Savoy's Form 8-K, dated December 19,
                        1996, is incorporated herein by reference.
        10.1            Form of Affiliation Agreements between USAi and Home
                        Shopping, filed as Exhibit 10.2 to USAi's Registration
                        Statement on Form 10, as amended, is incorporated herein by
                        reference.
        10.2 *          Form of 1992 Stock Option and Restricted Stock Plan between
                        USAi and Home Shopping, filed as Exhibit 10.6 to USAi's
                        Registration Statement on Form 8, as amended, is
                        incorporated herein by reference.
        10.3 *          Form of Retirement Savings and Employment Stock Ownership
                        Plan, filed as Exhibit 10.8 to USAi's Registration Statement
                        on Form 8, as amended, is incorporated herein by reference.
        10.4            Form of Indemnification Agreement, filed as Exhibit 10.10 to
                        USAi's Registration Statement on Form 10, as amended, is
                        incorporated herein by reference.
        10.5            Form of Loan Agreement, as amended, by and between Silver
                        King Capital Corporation, Inc. and Roberts Broadcasting
                        Company of Denver, filed as Exhibit 10.17 to USAi's Annual
                        Report on Form 10-K for the fiscal year ended August 31,
                        1994, is incorporated herein by reference.
        10.6            Form of Shareholder Agreement by and among Silver King
                        Capital Corporation, Inc., Roberts Broadcasting Company of
                        Denver, Michael V. Roberts and Steven C. Roberts, filed as
                        Exhibit 10.18 to USAi's Annual Report on Form 10-K for the
                        fiscal year ended August 31, 1994, is incorporated herein by
                        reference.
</TABLE>

                                       83
<PAGE>

<TABLE>
<CAPTION>
       EXHIBIT
       NUMBER                                   DESCRIPTION                            NUMBER
---------------------   ------------------------------------------------------------  --------
<C>                     <S>                                                           <C>
        10.7            Limited Liability Company Agreement, Funding Agreement and
                        Form of First Amendment to LLC, Registration Rights
                        Agreement and associated documents between USAi, the Class A
                        Shareholders of Blackstar Communications, Inc. and Fox
                        Television Stations, Inc., dated as of June 27, 1995 and
                        August 18, 1995, filed Exhibit 10.23 to USAi's Annual Report
                        on Form 10-K for the fiscal year ended August 31, 1995, are
                        incorporated herein by reference.
        10.8 *          1986 Stock Option Plan for Employees, dated as of August 1,
                        1986, filed as Exhibit 10.33 to Home Shopping's Form S-1
                        Registration Statement No. 33-8560, is incorporated herein
                        by reference.
        10.9 *          First, Second, Third and Fourth Amendments to the 1986 Stock
                        Option Plan for Employees, filed as Exhibit 10.31 to Home
                        Shopping's Annual Report on Form 10-K for the fiscal year
                        ended December 31, 1993, are incorporated herein by
                        reference.
        10.10*          Form of 1990 Executive Stock Award Program, dated as of
                        October 17, 1990, as amended, filed as Exhibit 10.23 to Home
                        Shopping's Annual Report on Form 10-K for the fiscal year
                        ended August 31, 1991, is incorporated herein by reference.
        10.11           Stock Purchase Agreement by and between Home Shopping and
                        The National Registry Inc., dated as of April 28, 1992,
                        filed as Exhibit 10.29 to Home Shopping's Annual Report on
                        Form 10-K for the fiscal year ended August 31, 1992, is
                        incorporated herein by reference.
        10.12*          Home Shopping Network, Inc. Employee Stock Purchase Plan and
                        Part-Time Employee Stock Purchase Plan, filed as Exhibit
                        10.30 to Home Shopping's Annual Report on Form 10-K for the
                        fiscal year ended December 31, 1994, is incorporated herein
                        by reference.
        10.13*          Home Shopping Network, Inc. Employee Equity Participation
                        Plan and Agreement and Declaration of Trust, filed as
                        Exhibit 10.31 to Home Shopping's Annual Report on Form 10-K
                        for the fiscal year ended December 31, 1994, is incorporated
                        herein by reference.
        10.14*          Home Shopping Network, Inc. 1996 Stock Option Plan for
                        Employees, filed as Exhibit A to the Home Shopping
                        Definitive Proxy Statement, dated March 28, 1996, is
                        incorporated herein by reference.
        10.15*          Home Shopping Network, Inc. 1996 Stock Option Plan for
                        Outside Directors, filed as Exhibit B to the Home Shopping
                        Definitive Proxy Statement, dated March 28, 1996, is
                        incorporated herein by reference.
        10.16           Exchange Agreement, dated as of December 20, 1996, by and
                        between the Registrant and Liberty HSN, Inc. filed as
                        Exhibit 10.25 to USAi's Annual Report on Form 10-K for the
                        fiscal year ended December 31, 1996, is incorporated herein
                        by reference.
        10.17*          Equity and Bonus Compensation Agreement, dated as of August
                        24, 1995, between Barry Diller and the Registrant filed as
                        Exhibit 10.26 to USAi's Annual Report on Form 10-K for the
                        fiscal year ended December 31, 1996, is incorporated herein
                        by reference.
        10.18*          Silver King Communications, Inc. 1995 Stock Incentive Plan
                        filed as Appendix G to USAi's Definitive Proxy Statement,
                        dated November 20, 1996, is incorporated herein by
                        reference.
        10.19*          Silver King Communications, Inc. Directors' Stock Option
                        Plan filed as Appendix H to USAi's Definitive Proxy
                        Statement, dated November 20, 1996, is incorporated herein
                        by reference.
</TABLE>

                                       84
<PAGE>

<TABLE>
<CAPTION>
       EXHIBIT
       NUMBER                                   DESCRIPTION                            NUMBER
---------------------   ------------------------------------------------------------  --------
<C>                     <S>                                                           <C>
        10.20           Shareholders Agreement, dated December 12, 1996, relating to
                        Jupiter Shop Channel Co. Ltd. among Jupiter Programming Co.
                        Ltd., Home Shopping Network, Inc. and Jupiter Shop Channel
                        Co. Ltd. filed as Exhibit 10.35 to USAi's Annual Report on
                        Form 10-K for the fiscal year ended December 31, 1996, is
                        incorporated herein by reference.
        10.21           Services and Trademark License Agreement, dated as of
                        December 12, 1996, between Home Shopping Network, Inc. and
                        Jupiter Shop Channel Co. Ltd., filed as Exhibit 10.36 to
                        USAi's Annual Report on Form 10-K for the fiscal year ended
                        December 31, 1996, is incorporated herein by reference.
        10.22           Purchase and Sale Agreement among Home Shopping Network
                        GmbH, Home Shopping Network, Inc., Quelle Schickedanz AG &
                        Co., Mr. Thomas Kirch and Dr. Georg Kofler, dated as of
                        January 16, 1997, filed as Exhibit 10.37 to USAi's Annual
                        Report on Form 10-K for the fiscal year ended December 31,
                        1996, is incorporated herein by reference.
        10.23           Joint Venture Agreement between Quelle Schickedanz AG & Co.,
                        Home Shopping Network, Inc., Home Shopping Network GmbH, Mr.
                        Thomas Kirch and Dr. Georg Kofler, filed as Exhibit 5.3 to
                        the Purchase and Sale Agreement, filed as Exhibit 10.38 to
                        USAi's Annual Report on Form 10-K for the fiscal year ended
                        December 31, 1996, is incorporated herein by reference.
        10.24           License Agreement, dated as of January 1, 1996, between
                        Ronald A. Katz Technology Licensing, L.P. and Home Shopping
                        Network, Inc., filed as Exhibit 10.39 to USAi's Annual
                        Report on Form 10-K for the fiscal year ended December 31,
                        1996, is incorporated herein by reference.
        10.25           Shareholder Agreement, dated as of April 26, 1996, by and
                        among Channel 66 of Vallejo, California, Inc., Whitehead
                        Media of California, Inc. and Silver King Capital
                        Corporation, Inc., filed as Exhibit 10.40 to USAi's Annual
                        Report on Form 10-K for the fiscal year ended December 31,
                        1996, is incorporated herein by reference.
        10.26           Loan Agreement, dated as of April 26, 1996, by and between
                        SKC Investments, Inc. and Channel 66 of Vallejo, California,
                        Inc., filed as Exhibit 10.41 to USAi's Annual Report on Form
                        10-K for the fiscal year ended December 31, 1996, is
                        incorporated herein by reference.
        10.27           Joint Venture and License Agreement, dated as of June 12,
                        1992, between Savoy Pictures Entertainment, Inc. and Home
                        Box Office, Inc. (confidential treatment for portions
                        thereof granted), filed as Exhibit 10(a) to Savoy's S-1
                        Registration Statement No. 33-57956, is incorporated herein
                        by reference.
        10.28           License Agreement, dated as of June 12, 1992, among Savoy
                        Pictures Entertainment, Inc. and Home Box Office, Inc.
                        (confidential treatment of portions thereof granted), filed
                        as Exhibit 10(b) to Savoy's S-1 Registration Statement No.
                        33-57956, is incorporated herein by reference.
        10.29           Warrant Agreement, dated as of March 2, 1992, between Savoy
                        Pictures Entertainment, Inc. and Allen & Company
                        Incorporated, filed as Exhibit 10(f) to Savoy's S-1
                        Registration Statement No. 33-57956, is incorporated herein
                        by reference.
        10.30           Warrant Agreement, dated as of March 2, 1992, between Savoy
                        Pictures Entertainment, Inc. and GKH Partners, L.P., filed
                        as Exhibit 10(g) to Savoy's S-1 Registration Statement No.
                        33-57956, is incorporated herein by reference.
</TABLE>

                                       85
<PAGE>

<TABLE>
<CAPTION>
       EXHIBIT
       NUMBER                                   DESCRIPTION                            NUMBER
---------------------   ------------------------------------------------------------  --------
<C>                     <S>                                                           <C>
        10.31           Warrant Agreement, dated as of April 20, 1994, between Savoy
                        and GKH Partners, L.P., filed as Exhibit 10.2 to Savoy's
                        Quarterly Report on Form 10-Q for the quarter ended March
                        31, 1994, is incorporated herein by reference.
        10.32*          Savoy Amended and Restated Stock Option Plan (including form
                        of Stock Options Agreement) filed as Exhibit 4.1 to Savoy's
                        Registration Statement No. 33- 70740, is incorporated herein
                        by reference.
        10.33*          Savoy 1995 Stock Option Plan filed as Exhibit 10(t) to
                        Savoy's Annual Report on Form 10-K for the fiscal year ended
                        December 31, 1995, is incorporated herein by reference.
        10.34           $1,600,000,000 Credit Agreement, dated February 12, 1998,
                        among USAi, USANi LLC, as Borrower, Various Lenders, The
                        Chase Manhattan Bank as Administrative Agent, Syndication
                        Agent and Collateral Agent, and Bank of America National
                        Trust & Savings Association and The Bank of New York as
                        Co-Documentation Agents, filed as Exhibit 10.50 to USAi's
                        Annual Report on Form 10- K for the fiscal year ended
                        December 31, 1997, is incorporated herein by reference.
        10.35           First Amendment and Consent, dated as of June 24, 1998, to
                        the Credit Agreement, dated February 12, 1998, among USAi,
                        USANi LLC, as Borrower, Various Lenders, The Chase Manhattan
                        Bank, as Administrative Agent, Syndication Agent and
                        Collateral Agent, and Bank of America National Trust &
                        Savings Association and The Bank of New York, as
                        Co-Documentation Agents, filed as Exhibit 10.39 to the S-4,
                        is incorporated herein by reference.
        10.36           Second Amendment, dated as of October 9, 1998, to the Credit
                        Agreement, dated February 12, 1998, among USAi, USANi LLC,
                        as Borrower, Various Lenders, The Chase Manhattan Bank, as
                        Administrative Agent, Syndication Agent and Collateral
                        Agent, and Bank of America National Trust & Savings
                        Association and The Bank of New York, as Co- Documentation
                        Agents, filed as Exhibit 10.40 to the S-4, is incorporated
                        herein by reference.
        10.37           Third Amendment, dated as of April 29, 1999, to the Credit
                        Agreement, dated February 12, 1998, among USAi, USANi LLC,
                        as Borrower, Various Lenders, The Chase Manhattan Bank, as
                        Administrative Agent, Syndication Agent and Collateral
                        Agent, and Bank of America National Trust & Savings
                        Association and The Bank of New York, as Co-Documentation
                        Agents, filed as Exhibit 10.39 to USAi's Annual Report on
                        Form 10-K for the fiscal year ended December 31, 1999, is
                        incorporated herein by reference.
        10.38           Fourth Amendment, dated as of January 31, 2000, to the
                        Credit Agreement, dated February 12, 1998, among USAi, USANi
                        LLC, as Borrower, Various Lenders, The Chase Manhattan Bank,
                        as Administrative Agent, Syndication Agent and Collateral
                        Agent, and Bank of America National Trust & Savings
                        Association and The Bank of New York, as Co-Documentation
                        Agents, filed as Exhibit 10.40 to USAi's Annual Report on
                        Form 10-K for the fiscal year ended December 31, 1999, is
                        incorporated herein by reference.
        10.39           Fifth Amendment, dated as of January 31, 2001, to the Credit
                        Agreement, dated February 12, 1998, among USAi, USANi LLC,
                        as Borrower, Various Lenders, The Chase Manhattan Bank, as
                        Administrative Agent, Syndication Agent and Collateral
                        Agent, and Bank of America National Trust & Savings
                        Association and The Bank of New York, as Co-Documentation
                        Agents, filed as Exhibit 10.41 to USAi's Annual Report on
                        Form 10-K for the fiscal year ended December 31, 2000, is
                        incorporated herein by reference.
</TABLE>

                                       86
<PAGE>

<TABLE>
<CAPTION>
       EXHIBIT
       NUMBER                                   DESCRIPTION                            NUMBER
---------------------   ------------------------------------------------------------  --------
<C>                     <S>                                                           <C>
        10.40           Form of Governance Agreement among HSN, Inc., Universal
                        Studios, Inc., Liberty Media Corporation and Barry Diller,
                        dated as of October 19, 1997, filed as Appendix B to USAi's
                        Definitive Proxy Statement, dated January 12, 1998, is
                        incorporated herein by reference.
        10.41           Form of Stockholders Agreement among Universal Studios,
                        Inc., Liberty Media Corporation, Barry Diller, HSN, Inc. and
                        The Seagram Company Ltd. dated as of October 19, 1997, filed
                        as Appendix C to USAi's Definitive Proxy Statement, dated
                        January 12, 1998, is incorporated herein by reference.
        10.42           Form of Spinoff Agreement between Liberty Media Corporation
                        and Universal Studios, Inc. dated as of October 19, 1997,
                        filed as Appendix D to USAi's Definitive Proxy Statement,
                        dated January 12, 1998, is incorporated herein by reference.
        10.43*          HSN, Inc. 1997 Stock and Annual Incentive Plan, filed as
                        Exhibit F to USAi's Definitive Proxy Statement, dated
                        January 12, 1998, is incorporated herein by reference.
        10.44*          Employment Agreement between Thomas J. Kuhn and HSN, Inc.
                        dated February 9, 1998, filed as Exhibit 10.56 to USAi's
                        Annual Report on Form 10- K for the fiscal year ended
                        December 31, 1997, is incorporated herein by reference.
        10.45*          Employment Agreement between Michael P. Durney and USAi,
                        dated March 30, 1998, filed as Exhibit 10.9 to USAi's
                        Quarterly Report on Form 10-Q for the quarter ended March
                        31, 1998, is incorporated herein by reference.
        10.46*          Employment Agreement between Michael Sileck and USAi, dated
                        October 12, 1999, filed as Exhibit 10.47 to USAi's Annual
                        Report on Form 10-K for the fiscal year ended December 31,
                        1999, is incorporated herein by reference.
        10.47*          Employment Agreement between Barry Baker and USAi, dated
                        February 19, 1999, filed as Exhibit 10.48 to USAi's Annual
                        Report on Form 10-K for the fiscal year ended December 31,
                        1999, is incorporated herein by reference.
        10.48*          Employment Agreement between Dara Khosrowshahi and USAi,
                        dated September 21, 2000, filed as Exhibit 10.1 to USAi's
                        Quarterly Report on Form 10-Q for the quarter ended
                        September 30, 2000, is incorporated herein by reference.
        10.49*          Employment Agreement between Julius Genachowski and USAi,
                        dated August 9, 2000, filed as Exhibit 10.5 to USAi's
                        Quarterly Report on Form 10-Q for the quarter ended June 30,
                        2000, is incorporated herein by reference.
        10.50*          Letter Agreement between Thomas J. Kuhn and USAi, dated
                        February 25, 2000, filed as Exhibit 10.1 to USAi's Quarterly
                        Report on Form 10-Q for the quarter ended March 31, 2000, is
                        incorporated herein by reference.
        10.51*          Consulting Agreement between Barry Baker and USAi, dated
                        June 21, 2000, filed as Exhibit 10.3 to USAi's Quarterly
                        Report on Form 10-Q for the quarter ended June 30, 2000, is
                        incorporated herein by reference.
        10.52*          HSN, Inc. Retirement Savings Plan ("Savings Plan"), filed as
                        Exhibit 10.58 to USAi's Annual Report on Form 10-K for the
                        fiscal year ended December 31, 1997, is incorporated herein
                        by reference.
        10.53*          Amendment to the Savings Plan, filed as Exhibit 10.49 to the
                        S-4, is incorporated herein by reference.
</TABLE>

                                       87
<PAGE>

<TABLE>
<CAPTION>
       EXHIBIT
       NUMBER                                   DESCRIPTION                            NUMBER
---------------------   ------------------------------------------------------------  --------
<C>                     <S>                                                           <C>
        10.54           Exchange Agreement, dated as of October 19, 1997, by and
                        among HSN, Inc. (renamed USA Networks, Inc.), Universal
                        Studios, Inc. (and certain of its subsidiaries) and Liberty
                        Media Corporation (and certain of its subsidiaries), filed
                        as Exhibit 10.60 to USAi's Annual Report on Form 10-K for
                        the fiscal year ended December 31, 1997, is incorporated
                        herein by reference.
        10.55           License and Services Agreement, dated as of August 12, 1998,
                        by and between Ticketmaster Corporation, Ticketmaster
                        Multimedia Holdings, Inc., and USAi (confidential treatment
                        for portions thereof granted), filed as Exhibit 10.29 to
                        Ticketmaster Online-CitySearch, Inc.'s Form S-1 Registration
                        Statement No. 333-64855, is incorporated herein by
                        reference.
        10.56*          USA Networks, Inc. 2000 Stock and Annual Incentive Plan,
                        filed as Exhibit 10.1 to USAi's Quarterly Report on Form
                        10-Q for the quarter ended June 30, 2000, is incorporated
                        herein by reference.
        10.57*          USA Networks, Inc. Deferred Compensation Plan For
                        Non-Employee Directors, filed as Exhibit 10.2 to USAi's
                        Quarterly Report on Form 10-Q for the quarter ended June 30,
                        2000, is incorporated herein by reference.
        21.1 **         Subsidiaries of USANi LLC
</TABLE>

------------------------

*   Reflects management contracts and compensatory plans.

**  Filed herewith.

(b) Reports on Form 8-K filed during the quarter ended December 31, 2000:

    None.

                                       88
<PAGE>
                                   SIGNATURES

    Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

April 2, 2001

<TABLE>
<S>                                                    <C>  <C>
                                                       USANI LLC

                                                       By:               /s/ BARRY DILLER
                                                            -----------------------------------------
                                                                           Barry Diller
                                                               CHAIRMAN AND CHIEF EXECUTIVE OFFICER
</TABLE>

    Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities indicated on April 2, 2001.

<TABLE>
<CAPTION>
                      SIGNATURE                                            TITLE
                      ---------                                            -----
<C>                                                    <S>
                  /s/ BARRY DILLER
     -------------------------------------------       Chairman of the Board, Chief Executive Officer
                    Barry Diller                         and Director

                /s/ VICTOR A. KAUFMAN
     -------------------------------------------       Director and Vice Chairman
                  Victor A. Kaufman

              /s/ WILLIAM J. SEVERANCE
     -------------------------------------------       Vice President and Controller (Chief
                William J. Severance                     Accounting Officer)

                 /s/ MICHAEL SILECK
     -------------------------------------------       Senior Vice President and Chief Financial
                   Michael Sileck                        Officer (Principal Financial Officer)

                  /s/ PAUL G. ALLEN
     -------------------------------------------       Director
                    Paul G. Allen

                /s/ ROBERT R. BENNETT
     -------------------------------------------       Director
                  Robert R. Bennett

               /s/ EDGAR BRONFMAN, JR.
     -------------------------------------------       Director
                 Edgar Bronfman, Jr.
</TABLE>

                                       89
<PAGE>

<TABLE>
<CAPTION>
                      SIGNATURE                                            TITLE
                      ---------                                            -----
<C>                                                    <S>
                 /s/ ANNE M. BUSQUET
     -------------------------------------------       Director
                   Anne M. Busquet

                /s/ PHILIPPE GERMOND
     -------------------------------------------       Director
                  Philippe Germond

                /s/ DONALD R. KEOUGH
     -------------------------------------------       Director
                  Donald R. Keough

                  /s/ GEORG KOFLER
     -------------------------------------------       Director
                    Georg Kofler

               /s/ MARIE-JOSEE KRAVIS
     -------------------------------------------       Director
                 Marie-Josee Kravis

                 /s/ PIERRE LESCURE
     -------------------------------------------       Director
                   Pierre Lescure

                 /s/ JOHN C. MALONE
     -------------------------------------------       Director
                   John C. Malone

               /s/ JEAN-MARIE MESSIER
     -------------------------------------------       Director
                 Jean-Marie Messier

                /s/ WILLIAM D. SAVOY
     -------------------------------------------       Director
                  William D. Savoy

              /s/ H. NORMAN SCHWARZKOPF
     -------------------------------------------       Director
                H. Norman Schwarzkopf

              /s/ DIANE VON FURSTENBERG
     -------------------------------------------       Director
                Diane Von Furstenberg
</TABLE>

                                       90
<PAGE>
                                                                     SCHEDULE II

                           USANI LLC AND SUBSIDIARIES
                       VALUATION AND QUALIFYING ACCOUNTS

<TABLE>
<CAPTION>
                                           BALANCE AT   CHARGES TO     CHARGES                    BALANCE
                                           BEGINNING    COSTS AND     TO OTHER     DEDUCTIONS-    AT END
                                           OF PERIOD     EXPENSES    ACCOUNTS(2)   DESCRIBE(1)   OF PERIOD
                                           ----------   ----------   -----------   -----------   ---------
                                                                   (IN THOUSANDS)
<S>                                        <C>          <C>          <C>           <C>           <C>
Allowance for doubtful accounts:
  Year ended December 31, 2000               $33,317      $21,133      $     42      $ (3,846)    $50,646
  Year ended December 31, 1999               $20,572      $21,207      $ (1,414)     $ (7,048)    $33,317
  Year ended December 31, 1998               $ 2,177      $ 7,810      $ 14,933      $ (4,348)    $20,572
</TABLE>

------------------------

(1) Write-off fully reserved accounts receivable.

(2) Amounts relate to the acquisition of USA Network as part of the Universal
    Transaction in 1998.