Diller is looking to expand by internally rolling out product rather than making acquisitions:
No Deal, Says Diller
IAC chief calls Net valuations ‘nuts,’ plans in-house rollouts.
February 7, 2007
By Ken Schachter
Inveterate deal-maker and Home Shopping Network czar Barry Diller is not buying—at least not at these prices.
The chairman and chief executive of IAC/InterActiveCorp., a conglomerate of 65 brands, including Ask.com, Match.com, Citysearch and Ticketmaster, Wednesday said valuations of Internet properties “have gone nuts.”
In a keynote address at the 2007 Media Summit New York, Mr. Diller said that rather than bid on over-priced assets, IAC would spend more than $200 million over the next few years to roll out a flurry of online services developed in-house. Ultimately, Mr. Diller’s multimedia ambitions could put him on a collision course with Google’s YouTube and other video-rich sites.
“We want to invent products,” he said. “We’ve got a ton of them.”
One will be 23/6, an online multimedia humor site scheduled for launch in a couple months. IAC is also introducing video to collegehumor.com. IAC bought a controlling interest in collegehumor’s parent company in August.
Mr. Diller knows something thing about video. A one-time mailroom clerk at the William Morris Agency, he rose to head Paramount Pictures, releasing hits from “Laverne & Shirley” to “Raiders of the Lost Ark.”
He later led Fox, creating a fourth television network to rival the big three and introducing the world to Bart Simpson.
Mr. Diller said this is a “perfect time” to introduce rich media content because broadband access allows delivery of video, audio, and data.
He acknowledged that he passed on MySpace, the phenomenally popular social-networking site snapped up for about $580 million by Rupert Murdoch’s News Corp. in 2005. The same year, however, IAC bought search engine Ask Jeeves, since renamed Ask.com, for $1.85 billion.
Mr. Diller said that before pulling the trigger, IAC executives debated the deal throughout the summer.
“At the end of the process, we said: There’s an opportunity,” Mr. Diller said. “We plunged in and bought it. It was absolutely a risk. It still is a risk. We thought the rising tide flooding into the media world would keep us afloat enough.”
Ask’s 6 percent share of the search market puts it in fifth place, lagging far behind top dog Google at 47 percent. Still, he said that market shares will balance over the next five or 10 years, giving Ask.com more than 10 percent of the market.
Defying the trend toward, user-generated content, Mr. Diller maintained that audiences will continue to respond to professionally produced media.
“It will not be the long tail,” said the 65-year-old Mr. Diller. “It will be the very short tail creating content that will resonate with people.”
Ultimately, the demand for user-posted animal and home videos will fade, he said. “That’s scrapbooking. The truth is the professional talent pool is finite.”
On Monday, IAC posted fourth-quarter revenue of $1.82 billion, missing the $1.9 billion analyst consensus. Revenue from HSN and IAC’s other retailing units rose 4 percent. Diller said that turning around HSN will take some time.
“We took our eye of the daily business and made a series of merchandising mistakes,” he said.
Legendary former GE Chief Executive Jack Welch has signed on as a consultant at IAC, Mr. Diller said.
“When Jack is on site, Jack runs the company,” Mr. Diller gushed. “He is without question the best manager ever invented.”
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