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— Backstory —
It wouldn't be the first. What began as Silver King Communications Inc., a group of television stations Barry Diller started running in 1995, became HSN Inc. after merging with Home Shopping Network. Then, with Universal Studios' TV assets thrown into the mix, the company morphed into USA Networks Inc. A slew of dot-com acquisitions precipitated a switch to USA Interactive, whereas the company's contribution of USA Entertainment to Vivendi Universal Entertainment set the stage for InterActiveCorp. Since 2004, for reasons already lost to history, the acronymic IAC has officially preceded InterActiveCorp. There has been much striving throughout. Chairman and CEO Diller has constantly shuffled IAC's new-media deck, straining to come up with the right hand in the same way he's always reaching for the right word. Yet he kept his eyes on the prize -- or so we believed until last week.
That's when, during IAC's third-quarter earnings call, Diller retreated to his mogul roots by committing the company to content production. "Our commitment to this area is real, and we're going to invest," he said. "We have ambitions to produce programming of all lengths and for both the historical media and the Internet." The same call also revealed Diller's receptivity to cutting loose Ask.com. "We've been asked a lot whether we're open to consolidating transactions in the area of search," he said. "The answer is yes, and it's unlikely we'd be the consolidator." While a sale of Ask.com makes sense, particularly in light of its marginal share of 3.9%, the idea reinforces a sense of abandonment. Ask.com was supposed to keep the crazy quilt of IAC stitched together. Diller might as well have said: So much for my transformation from media mogul to cyber-CEO. So much for so-called contextual commerce. And so much for taking on entire industries migrating online. What we have here is a company of opportunism rather than vision. And its exposure as such plays to fears that IAC is little more than a mogul whose entitlements include playing with other people's money. Lots and lots of money. Bernstein Research analyst Jeffrey Lindsay may not have had the thought first, but he did articulate it best: "We think IAC is still a large pile of cash with some average to underperforming businesses attached. We agree with the description that it is, in effect, a private equity fund with approximately 17% of the assets under its control invested." Lindsay delivered the insight in response to IAC's announcement in July of a joint venture with Ben Silverman, the recently sidelined co-chairman of NBC Entertainment. According to the release announcing the JV, since named Electus, the objective is "to create a truly integrated and truly interactive new media production entity, a next generation enterprise that bridges the gap between traditional television and the Internet." Electus joins other forays into media. There's the sophomoric CollegeHumor.com, in which IAC took a majority stake in 2006. There's The Daily Beast, a year-old digital startup curated if not edited by founder Tina Brown -- she of Tatler, Vanity Fair and The New Yorker fame. And there's Urbanspoon, the online aggregator of restaurant reviews, acquired in April. IAC has been active on other fronts as well. Barely a year ago, it completed the spinoffs of HSN Inc., Interval Leisure Group Inc., Ticketmaster Entertainment Inc. and Tree.com Inc. The idea there was to unlock value by streamlining operations that had gotten so complex that the unspun company, Diller once said, required "seven weeks of planning for '08." Even with spinoffs, IAC has 50 brands in its stable. And so the case still gets made that complexity reigns. "We think that the synergies are overstated," Morningstar Inc. analyst Larry Witt opines in a research update. "We also think that owning so many different Web properties could lead to a lack of focus and poor execution." One can't help wondering what's ahead, given IAC's cash hoard of
$1.8 billion. (IAC's capital structure is such that cash on hand
accounts for more than 70% of the stock price.) What has passed,
however, is 15 years of change. Yet IAC has only gone half circle: from
the newest of old-media companies to, seemingly, the oldest of
new-media companies. Richard Morgan covers media for The Deal. |
IAC/InterActiveCorp has gone through so many incarnations that it warrants a name change: HYPE/HyperActiveCorp.
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