IAC chief Barry Diller has spent the last year building and then sitting on a pile of cash, which rose to $2 billion in the first quarter — only some $400 million less than its entire market cap of $2.4 billion. Journalists and Wall Street have asked Diller repeatedly how he intends to use the cash. A big M&A move perhaps? A generous one-time dividend maybe? Or share buybacks?

Diller is focused on adding to his empire of Internet units in small increments rather than making major acquisitions. That empire includes dating site Match.com, search engine Ask.com, event planning site evite and many others.

Here’s Diller back in April on the first quarter conference call with analysts: “While I can’t say what we’ll do, obviously, other than invest in the businesses we have, because we believe they’re worthy of investments, relatively small scale, we’re open but I am actually not optimistic about being able to extensively spend the enormously large amounts of cash that we have. It could change on a dime, but there it is at the moment.”

True to his word Match.com said on Tuesday it has signed an agreement to buy People Media, an operators of targeted dating sites for $80 million in cash from American Capital Ltd.

People Media owns 27 dating sites incluing BlackPeopleMeet.com, SingleParentMeet.com and SeniorPeopleMeet.com with a combined 255,000 paying subscribers.  IAC said People Media generated $11.6 million in earnings before interest, taxes, depreciation and amortization (EBITDA) in 2008.