Giving Old Media Queen Barry Diller the boot:
A curious habit of Diller is to blame the stupidity of the free market. Diller
knew what was best for LCOS, not the stock market. In what is
practically a ringing indictment against capitalism, he has blamed the failing
stock price of LCOS on day-trading gnats.
The day LCOS crashed, Diller came up with an outrageous response. An article notes:
"Mr.
Diller attributed part of the drop in Lycos shares to the broad 'correction' in the Internet
sector Tuesday." Clearly bullshit. LCOS/USAI was the driving force, the lynchpin,
behind the sector selloff that day rather than an unlucky victim caught on an bad day for
the sector. The USAI deal actually sent the entire sector reeling.
And, unlike other Net stocks, LCOS never recovered.
IS LCOS worth only 30% of the combined USAI behemoth?
It's unfortunate that Davis thought it was all Lycos was worth.
But what's going on with Wetherell complaining that he
could find a better deal? Were they not trying very hard
in the first place when settling with USAI?
It's still impressive Diller can build an empire with a direct selling
component often stigmatized as peddling zirconium and trinkets to
uninformed impulse buyers by salespeople who clearly don't understand the
junk they are pushing. Hopefully he can adapt to the information-rich
environment of the Internet, where buyer empowerment reaches
new heights.
We are still in the early stages of what is emerging as the
dominant mass medium. Diller's mindset regarding New Media is
reactive rather than that of a visionary pioneer. In the new economy,
intellectual capital makes all the difference. Am I the only one who is
worried about the tragic results if Barry Diller were to call all the
shots for Lycos?
Wetherell rightly questioned whether Diller could fully understand
and integrate new media with his ambitious plans.
In response, Diller engaged in vicious personal attacks,
saying of Wetherell, "who was
never known for his fidelity". Diller, who was never known
for understanding New Media, can only attack Wetherell and the
free market for his bluders rather than convince the world
that this deal made sense.
Diller's forays into the new medium are interesting. Sort of like
watching a giant squid taking its first clumsy steps on dry land.
Diller, the same visionary who passed up a chance to buy 20 percent of AOL
in 1994, for around $100 million. A stake worth around $20 billion today.
Diller's always had a love-hate relationship with the Net...
Time Magazine article excerpt:
Get real, says Diller. "There has been an
enormous amount of arrogance, of easy money
made by people who are extraordinarily arrogant
about the real world and how difficult it is to build
and sustain a business," he says. He likens
Internet companies to "slot machines that pay off
again and again. If I was an investor, I'd be
corrupted by it to some degree as well."
In another infamous speech, as reported in a Wired article, Diller complained
heavily about supposedly overvalued Internet stocks. This was nearly a year
ago, by the way.
In a speech defending the LCOS deal, he emphasized his company was a
real company "making *real* profits," which was intended as a backhanded slap
to Net companies. I suppose he thinks these fast-growing companies
are going through cash burn because they are not concerned about profits.
Perhaps he will think differently when these same companies will be taking
away his market in a few years.
Complaining in a public speech about how expensive net stocks were
(at a time when Net stocks were extremely cheap compared to their
present value). Hmm. If he would have just quit whining and started
acting, he would now be the media empire queen he's always about
fantasized becoming.
The Industry Standard excerpt:
"That's what's happening with Diller and David Wetherell, Lycos' most
unhappy shareholder. Diller is telling Lycos (and the rest of the
Internet): I can do your job better than you. If it's an e-commerce
play or media play, I have more experience than you guys, an
infrastructure for selling advertising and goods that far surpasses an
Internet site infrastructure, and an operation that is far more
efficient than yours. Wetherell is saying, You just don't get it."
An LATimes article reflected some controversy regarding
previous Ticketmaster CitySearch CEO Rosen who thought
Diller didn't pay enough for the company and soon afterwards
resigned after Diller did not give him enough control over the
unit's direction.
Another article notes: "Rosen, meanwhile, has told those close to him that although Diller
may be terrific at running a television or movie business, he is skeptical
of Diller's ability to create new businesses based in significant part
on Internet and phone transactions."
Sure, Diller may influence people with his ego and tough, ruthless personality.
Stories of him throwing a videotape, in rage, at his employee so hard
that it went through the wall grab attention. But vision is what really
counts in the new medium. Somehow I can't see Diller as
having a modicum of the insight that the founders of Yahoo!, Amazon, etc. had.
A few parting thoughts from Jim Cramer of TheStreet.com:
Question: Jim , Will Old Media spice up the
summer tech doldrums with their renewed interest in On-Line
media ?
Cramer: Maybe, but that may require some of
these guys to buy computers, and I don't know if they would
know where to find them? Maybe yellow pages?...
...I
would bet that the reason why a lot of execs didn't embrace
the Web right out of the box is that they have assistants
who do their computer work. The Net is a personal
experience; you have to be on it to get it. They probably
used their PCs as planters or ashtrays.
I think these guys got on it. They saw what we all saw. Now
they want to conquer. Who can blame them? - James Cramer
"This guy [Davis] can't deal with the level
of glitz that Diller dangles. I have been in
there with those sharp glamour people.
They force you to take your eye off the
ball." Cramer on Diller fleecing LCOS
A few interesting links:
Barry Diller Is No Visionary Fortune Magazine
pathfinder.com
smartmoney.com
Diller: The Net's New Math Won't Work
washingtonpost.com
"Not to gloat or Anything but..."
Temporary URL about how Diller may be gloating whenever AOL
stock falls, now that he's missed out on the ride.
thestandard.net
Barry Diller, Hero
boards.fool.com
Motley Fool post on the controversy
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- Netconductor.com |
