Barry Diller is finally streamlining his life by deconglomerating IAC. The Internet giant (with quarterly revenues of $1.5 billion) announced this morning that it will break up into five separate companies, each one publicly traded. They will be:
—HSN (the Home Shopping Network, both TV and online)
—Ticketmaster
—Lending Tree
—Interval International (a marketplace for vacation timeshares, which will also include CondoDirect, Resort Quest Hawaii and VacationSource.com)
—IAC (the remaining Web businesses, including Ask.com, Bloglines, Citysearch, Evite, iWon, Match.com, BustedTees, and CollegeHumor)
Diller will continue as CEO and chairman of IAC, which still remains somewhat of a grab bag of about 30 Websites. But at least those businesses are starting to finally be able to stand on their own feet. It doesn’t make much sense for them to be weighed down by Lending Tree because of the mortgage credit crisis or overshadowed by the Home Shopping Network. IAC’s holding company model gave shelter to its startups with the earnings of its more established operations, but any troubles in the larger businesses are difficult for the smaller ones to overcome no matter how fast they are growing.
That will continue to be the case in some respects within the Web-only IAC. While a portfolio approach does help to reduce overall risk, it is not what most investors are looking for (the stock was up nearly 9 percent this morning on the news). IAC is better off spinning off its larger standalone companies. Arguably, it could still benefit by shedding more businesses down the line.
The big news buried in all this was that Ask.com re-upped its ad-serving deal with Google for five more years, and got $3.5 billion guaranteed. Currently, Ask.com makes up 10 percent of Google’s ad revenues from partner sites, or about $100 million a quarter. The new five-year deal assumes that will increase to $175 million per quarter. So something is working.
Thats a good move..individually they can prove their strength and then they can always merge back again…or take part in some complex re-structuring.
http://www.meetingflex.com
Social Networking +Video-Crap
I work at IAC, and I haven’t heard anything about it until I read it here! I haven’t gone to work yet either. :/ (I work at Bloglines)
This is a great move for Diller. The abovementioned companies can survive as stand-alone entities, and should generate quite the buzz across Wall Street. I guess it all really depends on where the public offerings are priced.
I think it is a good idea. It will allow a greater focus and as #1 said, they can merge back up later. Additionally, there is a potential for a greater upside.
Agreed. It is a good idea. Investors win. The companies become more agile. There was not enough synergy between the various companies to warrant keep them together.
(Bjorn: don’t take it personally… it has a LOT to IAC being a public company. It is important to get a message like this out to the market in a single beat so it can react. And, good luck to you. I use Bloglines…keep it up.)
What? What? Are you kidding? This is insane! It’s like ripping off the hands and feet of a well-performing athlete. Ruthless and relentless integration was what made IAC good, and even more integration could have made them great. This move might make sense for the bean counters, but it doesn’t make sense strategically.
Slight typo: “in the larger businesses are difficult for teh smaller ones to overcome no matter how fast they are growing.”
This is interesting. I wonder if the plan was to use the larger budget of the unified IAC for Asks recent advertising push, then break up the campaign as that breaks down so the internet properties see the benefits but not the cost of “Who killed the Algorithm?”. (Assuming there are benefits to be had).
Or maybe, Barry is getting ready to sell Ask to a certain pacific northwest software company, and this made that easier?
took him long enough….
Just because integration hasn’t worked, doesn’t mean that breaking them into distinct business units is going to work. This is just a delaying tactic. Sooner or later, Diller is going to have to admit that a large number of these companies are performing well below expectations.
And anyone using the word “deconglomerate” should be beaten to death with a unabridged dictionary. Deconglomerate your head from your ass.
Per Diller about the diverse holdings, “…Now that we have real scale in the pure Internet units, it makes nothing but sense to me to reorganize the whole…..Each of these spun-off businesses is in fact a distinct business sector, and each will benefit from standing on its own, with its own capital structure, its own currency which will enhance its ability to attract and retain superior talent and make acquisitions, and a focused story investors can clearly understand and buy into.”
Trouble at IAC could mean trouble for a lot of startups here. IAC is arguably one of the key players in acquiring emerging startups. Think Google, Yahoo, MSN, News Corp., AOL announcing they’re cutting back on acquisitions. THIS COULD BE HUGE!!!
@ 11 – sounds a bit like the Sky is Falling here. Steve Ballmer was pretty darn bullish on acquiring companies at Web2.0 Summit this year. Facebook could start acquiring even. The only thing overshadowing anything is Bubble2.0.
what, no mention of the $3.5b/5yr Google deal? no doubt Yahoo and MSFT got aced out on that one:
“IAC also announced Monday it struck a five-year approximately $3.5 billion deal with Google Inc., giving the Internet giant the right to sell ads on Ask.com and other IAC Web properties. The deal follows an intense year long negotiation in which Google competed with both Microsoft Corp. and Yahoo Inc. for the right to sell ads on Ask, which accounts for about 5% of Internet searches.” – WSJ
Survival of the fittest I say!!! This is a good move for their shareholders (albeit medium to long-term). There will certainly be some hiccups in the beginning as IAC sorts out the suckling piglets from the magic beans.
I expect acquisitions will be paused or muted in the next little while, but NOT for long! There are still plenty of web treats out there (… like Stumbleupon, JackSawJane, etc.) that would strengthen within a fortified Diller portfolio.
this is only going to have a POSITIVE impact on the stock – it will go up to where it should be valued. it is and has consistently been UNDERVALUED by any standards when compared to other companies. this will spin off the solid but slower growing assets and keep the fast growing internet properties by themselves where they have always belonged. wall street will respond and stock will finally move up SHARPLY!
this is the time to buy!
Any more on the IAC intent to acquire Flixster?
This was the ONLY solution. Companies should be diversified but in this hyper-dynamic marketplace, Internet conglomerates can get clobbered. There’s simply too much talent (and venture capital) out there. IAC’s RealEstate.com is just one example. Just barely got out of the box before they encountered new players such as Zillow and Trulia. These companies need to be ‘lighter on their feet’ and independently managed and financed.
Good thing that guy is not doing business in Denmark.
Diller *LOL*