Diller Weaves a Web
He bought Ask.com not just to get into the search game, but to integrate his $20 billion Web portfolio.
By Brad Stone
Newsweek
Nov. 6, 2006 issue - The quarterly meetings of execs at Internet conglomerate IAC/InterActiveCorp are a bit like the first day of classes at a strict, strange prep school. Twenty-three CEOs of IAC subsidiaries like Match.com, Citysearch, Ticketmaster and the Home Shopping Network spend two days either at IAC headquarters in New York or at the L.A. home of its CEO, Barry Diller. There's a strict headmaster present—not Diller, but IAC consultant and former GE chief Jack Welch, who Diller says "is brutal as a cheerleader. You can't go five minutes without an argument from him." At the beginning of the session, the execs are asked to vociferously debate the issues and challenges facing the Internet firm. And at the end, when the attendees have dinner together, they're instructed to sit next to someone they don't know and to find a way to work together.
That last directive is now becoming particularly important for IAC. Over the past decade Diller, 64 (who sits on the board of The Washington Post Company, which owns NEWSWEEK), has spent more than $20 billion to assemble a broad portfolio of Web companies. But he's treated them more as a disparate set of assets rather than a unified Internet company. That's about to change. With the $1.7 billion purchase last year of fourth-place search firm Ask.com, Diller now has an opportunity to begin mixing his various Web properties together. Later this fall, information, reviews and e-commerce opportunities from IAC sites like Citysearch, Ticketmaster and Evite will begin appearing directly in the search results of Ask.com users. "Now is the time to bring these companies together, because in Ask.com, we have the kind of organizing glue that makes use of almost all the assets we have," Diller says.
Diller has lots of ground to cover if he's going to catch up to other Web giants. Ask.com, with 40 million monthly users worldwide, badly trails search leaders Google (107 million visitors), Yahoo (130 million) and MSN (119 million). Wall Street has also been skeptical of IAC's efforts so far, sending IAC stock down 24 percent since 2003. But Diller, the brash media mogul who ran Paramount and Fox Television in the '70s and '80s, sees an opportunity in providing simple answers to basic search queries. He says that the "cold blue links" and ad-cluttered Google pages don't answer basic user questions. After he bought Ask.com, Diller actually pared back the site's distracting banner ads. Blending in content from other IAC properties, he now believes, provides a more intuitive experience that could change consumers' searching habits. "I don't think people are frozen forever in what they are using to search the Internet," he says.
He hopes the revamped search site can be an alternative. Ask.com CEO Jim Lanzone calls it "the largest united endeavor that IAC has ever undertaken," and offered NEWSWEEK a preview. When searchers look for concert dates in the search engine, reviews from Citysearch and ticket-buying opportunities from Ticketmaster pop up at the top of the results; concert venues also appear pinpointed next to the results on an Ask.com map. Try to find a plumber in your city, and reviews and booking opportunities for local plumbers appear courtesy of another IAC company, ServiceMagic.com. The integration works in more esoteric ways, as well. Query a campground on Ask, and the results let you make a campground reservation via ReserveAmerica.com (who knew Diller owned that?). IAC execs deny they're building an AOL-style "closed garden" where users will only have access to IAC content. They point out that non-IAC properties like movie-ticket site Fandango have also been integrated into Ask.com search results.
For Diller, the integration of IAC is all about keeping up with the fast pace of change on the Internet. He credits his old boss at Fox, Rupert Murdoch, with meeting the challenge and wisely buying properties like social-networking firm MySpace. Diller says that he's looking at one new company right now. "The wonderful thing is that the window of opportunity on the Internet is not going to close any time soon," he says. But he predicts: "All old-media dogs are going to have some more sleepless nights."
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