(Updated from 12:11 p.m. EDT)

The lure of travel in and around cyberspace is strong indeed.

USA Networks

(USAI) - Get American Energy Independence ETF Report

agreed to purchase a controlling interest in online travel agency

Expedia

(EXPE) - Get Expedia Group, Inc. Report

in a move designed to help Barry Diller's media group bolster its own online travel presence.

USA will acquire up to 37.5 million Expedia shares, or about 75% of the company.

Microsoft

(MSFT) - Get Microsoft Corporation (MSFT) Report

has agreed to sell 33.7 million Expedia shares and warrants to USA. Based on Expedia's recent trading price, the deal is valued at about $1.65 billion.

Robert LaFleur, a Bear Stearns analyst who covers Expedia, said the deal will create better opportunities for the company, but it may not really mean a lot for stockholders.

"I don't think a whole lot is going to change," he said. "It doesn't look like the deal is structured to appeal to the public shareholders." The analyst said the agreement appears to have been reached in a way that will allow Microsoft to capitalize on its Expedia holdings. "This is a good way for Microsoft to realize the value of this investment, which has been extremely successful," LaFleur said. (Bear Stearns hasn't done underwriting for Expedia.)

For Diller, Expedia is part of a continuing strategy of assembling a series of properties at the intersection of new media and commerce. Built on USA's

Home Shopping Network

and its online operations, Diller's content-and-commerce mini-empire includes

Ticketmaster

(TMCS)

-- the operator of

TheStreet Recommends

ticketmaster.com

, the

Citysearch

local guides and

Match.com

dating service -- as well as

Hotel Reservations Network

(ROOM)

and online merchandiser

Styleclick

(IBUY) - Get Amplify Online Retail ETF Report

.

Shares of Expedia initially spiked on the news, reaching $49.15, a 52-week high. But investors later soured on the pact, as Expedia ended the regular session down 7.8% to $44.89. Expedia has had a great run in 2001. On Jan. 2, the company's stock closed at $9.31.

USA Networks also struck a deal to acquire

National Leisure Group

, an online cruise and vacation package agency. And in a bow to the interconnected multimedia world in which we live, USA said it plans to launch the

USA Travel Channel

, a new cable television service.

Aside from finding a new controlling shareholder, Expedia said it expects to post earnings, before noncash items, of $12 million to $14 million, or 20 cents to 23 cents a share, for the fiscal fourth quarter. The forecast is substantially above the company's earlier guidance and analysts' estimates. Pros polled by

Thomson Financial/ First Call

are expecting earnings of 9 cents in the quarter.