Barry Diller’s deal of the day
Barry Diller runs his company, IAC, like a used-car dealership. That comparison is meant to disparage neither Diller nor used-car lots but to capture the shark-toothed, high-velocity, unsentimental manner in which Diller conducts business. How many photos of Diller have him wearing the fake grin of the car salesman, the one that says “I’m your friend until the deal is done or abandoned, and then you’re just another future mark to me”?
The vehicle on the market eliciting Diller’s deal lust this week is About.com, the content farm owned by the New York Times Co. After word leaked that the Times Co was about to sell the site to Answers.com for around $270 million, my Reuters colleague Peter Lauria reported that Diller was bidding “in excess of $300 million” to nab it for his Internet portfolio. Given Diller’s wheeler-dealer instincts, that was probably a soft offer. Lauria promptly tweeted a pair of qualifiers to his piece, noting that if Answers.com dropped out of the deal, IAC might cut its bid. “That’s dealmaking 101,” Lauria tweeted. “Diller knows this better than anyone.”
Lest you think I belabor the used-car-dealer metaphor, give a gander at the array of properties populating the IAC lot. Some, like Match.com, look like real businesses the way a BMW looks like a real car. Others, like Vimeo and Ask remind you of YouTube and Google the way Infiniti and Acura are supposed to remind you of Mercedes-Benz and Audi. Properties like ShoeBuy.com are the “beaters” on the lot, unglamorous Toyotas that should trundle on forever, while SportsPickle.com, Excite, and Newsweek/Daily Beast resemble rusty Suzukis, Kias and Mitsubishis, resting on concrete blocks.
That’s what the latter-day Diller does — he buys, sells and trades properties like a milkmaid churns butter, forever seeking to create a blend with higher value. And to hear him tell it, he’s doing a pretty good job. The stock has more than doubled over the last two years — up 118 percent — and it now has a market cap of $4.5 billion. That’s no Google ($221 billion), but what is? The latest quarterly earnings report put revenues at $680.6 million, up 40 percent.
IAC’s corporate history page illustrates his method better than any paragraph I could muster. He’s bought into and sold out of (or spun out of) the businesses of broadcast television, TV home shopping, tickets, hotel reservations, gifts, airline tickets, lending, invitations, and more since founding IAC’s precursor company in 1995, as well as starting and acquiring a slew of dot-coms along the way. “IAC resembles a Berkshire Hathaway of Internet companies, a cheap acquirer but stable and growing,” Vanessa Grigoriadis wrote in a recent issue of New York magazine, although I still insist the better comparison is CarMax. Everything he owns is for sale. Everything for sale is a potential acquisition. In 2009, Diller said on an earnings conference call that he was open to selling Ask to the right bidder. Dealers can’t be sentimental about their properties. (Note to Tina Brown: Keep updating your resume.)
Diller is as eager as the next used-car dealer to bottom-feed his way to a profit. But he loves the scent of a new idea, too, such as the TV movie-of-the-week — he’s given credit for inventing that at ABC in 1971 — or the creation of the Fox network, which he started for Rupert Murdoch. The latest Diller bet is the Aereo system, a wrecking ball he’s swinging at the over-the-air broadcasters. Aereo retransmits local TV broadcasts to Aereo subscribers’ smartphones, iPads, computers, and Internet-capable TVs via the Internet. Although Aereo is billed as a convenience device, giving city dwellers clear TV “reception” without having to subscribe to cable, and offering DVR functionality to boot, it’s really a new TV platform through which Diller could pipe all sorts of competitive programming.
But Diller’s offer (or feint) for About.com has less to do with this kind of innovation than it does portfolio balancing, as Jeff Bercovici explained at Forbes this week. The sense of the deal for IAC, Bercovici wrote, would be to pair About.com with IAC’s also-ran search engine, Ask. “We are not speculators, we’re operators,” IAC CEO Greg Blatt told Bercovici in April. This sort of pairing and even triplicating of companion sites is central to the Diller vision. In dating, the IAC pay site Match.com is augmented by the free site OKCupid.com; other demographics are served by his sites BlackPeopleMeet.com, SeniorPeopleMeet.com, SingleParentMeet.com and BBPeopleMeet.com (that’s “big and beautiful”). MarriedPeopleMeet.com must be in the IAC pipeline somewhere.
At heart, Barry Diller remains the Hollywood film studio boss that he was at Paramount and Fox. He is as ready to roll the dice on a big-budget show like About.com or Ask, which cost IAC $1.85 billion in 2005, as he is an indie-size production like the comedy site Jest.com, which the company launched last year.
“We’re not really deal junkies,” Diller said at a Fortune conference in 2009. “We just followed the opportunity.”
Yeah, but I’ll bet he’d buy back for the right price whatever crummy website he last sold you, slap some new tires on it, tune it up, and resell it to the next greater fool.