Newsweek offline + online is the future, says Barry Diller

Many of you  might have forgotten IAC/InteractiveCorp’s Daily Beast and Newsweek agreed to merge operations last November to create a new entity called, well…  Newsweek. And that would be understandable as it’s been pretty quiet till this week’s interview scoop with the former IMF chief Dominque Strauss-Kahn’s accuser.

IAC Chairman Barry Diller (pictured, right) told Wall Street analysts today that Newsweek has a promising future very different from the floundering Newsweek of recent years. He said under the leadership of Daily Beast founder Tina Brown the weekly magazine is starting to win back advertisers and subscribers.

“The losses are not really high. In a year, year-and-a-half or so, I think it’s probably a year-and-a- half, I think we’ll have no losses and be on the positive side. And I think for a pretty small investment we’re going to build a serious long-term asset in new publishing,” which he describes as the combination or offline and online.

Diller said the publication has some 10 million unique visitors on the Web and said the effort would  result in “reasonable losses”. He said total investment will probably come to a total of $50 million from “inception to conclusion of losses”.

This isn’t too dissimilar to Rupert Murdoch’s estimation for The Daily, the iPad-based daily magazine News Corp launched in February with much fanfare, a $30 million pre-launch  investment and a promise to spend around $500,000 a week running it. News Corp has not said much about The Daily since its launch and in recent weeks, well… they’ve had other distractions. Still New York Observer has a story here today saying the fledgling news service is suffering start-up growth pains.

Friday’s Media and Technology Roundup

Fans scramble for Apple’s iPhone upgrade-Reuters

“Apple fans lined up overnight by the hundreds outside stores in the United States, Europe and Japan to snap up the latest iPhone, setting a new benchmark in the fast-growing smartphone market,” writes Franklin Paul, Marie Mawad and Sachi Izumi.

Twitter settles privacy charges with U.S.-Reuters

“Microblogging service Twitter has agreed to a settlement with the U.S. Federal Trade Commission over charges it put its customers privacy at risk by failing to safeguard their personal information,” reports Sinead Carew.

Broadband spurs new businesses and ideas in Kenya-Reuters

“When Kenyan graduate Roy Wachira, 25, set out to start his first business, he turned to the Internet, whose growth in the east African nation is spawning opportunities unthinkable even a year ago,” writes Duncan Miriri.

Live blog from the Reuters Global Media Summit

Reuters reporters will be sending live updates from interviews with guests including Disney’s Anne Sweeney, IAC’s Barry Diller, WPP’s Martin Sorrell, Sirius XM’s Mel Karmazin and more.

from Summit Notebook:

What will the media company of the 21st Century look like?

In the run-up to the annual Reuters Media Summit, taking place in New York and London next week, we have been asking experts and executives how they think media companies should reinvent themselves for the 21st Century.

Will the big need to get bigger? See Comcast's bid for a controlling stake in NBC Universal.

Or will it be a question of being slimmer and more focused? Like Time Warner,  which is now essentially a pure content company after spinning off Time Warner Cable in March and AOL next week.

IAC starts spending some of its cash on more dating sites

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, search engine, 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 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, and 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.

Pay TV: Shelter from the storm?

Safe haven. Two magical — and mysterious — words. Cable and satellite companies didn’t fit the safe haven bill in 2008, but 2009 just may be there year.

According to a Reuters story out today, “cable and satellite service providers now hold the promise of strong free cash flow growth as they retain old customers but spend less on deploying set-top boxes and digital video recorders due to a fall in new subscriber growth.”

Remember, however, that before the economy fell apart, a number of investors considered the pay TV industry “recession proof.” The argument went that even in the toughest of times, Americans would stay home and watch TV, saving money on trips to movies or out to dinner.

from Summit Notebook:

Diller to profitable companies: Lay off the layoffs

IAC Chief Executive Barry Diller took several groups to task at the Reuters Media Summit, but he reserved special disgust for CEOs at profitable companies who add to the country's rising unemployment rate.

Also targeted by the former Hollywood executive were "incredibly, shockingly stupid" Big 3 auto executives, the Internet's strange and growing dictionary, and Hollywood's lack of creativity.

Diller said companies had a higher obligation, especially in tough times like these:

NBC winning big in the games

swim.jpg NBC is putting up big numbers so far in the Olympics.

Start with the opening ceremony. While some complained that the event couldn’t be seen live in the United States, the move to delay the broadcast and run it during prime-time paid dividends. Some 34 million viewers tuned in, up about 35 percent since the last summer games.

Indeed, helped by the splashy opening ceremony and the star power of swimmer Michael Phelps, NBC is setting the stage for what could be record Olympic viewership in America.  Over the first two days of its coverage, NBC has attracted a record 114 million total viewers – 4 million more than Atlanta in 1996 and nearly 20 million more than Athens in 2004.

Those numbers suggest that Web coverage hasn’t taken away from NBC’s TV audience.

Barry Diller goes it alone, and he’s fine with that

bd.jpgCall it the new simplicity. IAC’s businesses are better off on their own in the market than trying to work with a strategic partner, according to chief mogul Barry Diller.
Recently empowered by a court decision that says he can do what he wants with IAC with little limitation from controlling shareholder Liberty Media, Diller said today a plan to spin off four major IAC units probably won’t involve any partners and that he was on track to complete the separation in August. 

Here’s his comments from a conference call to discuss quarterly earnings. We’re wondering how much of this may still be a negotiating position, or should we expect to see one big IAC, and four little IACs, trading on the Nasdaq before Thanksgiving: 

What we’re not discussing is the possibility of a so-called swap transaction with Liberty. While the potential for such a deal exists just by the nature of our relationship, I think it’s very unlikely that one will occur. 
Relative to private equity, we’ve had lots of discussions, we have lots of people knocking on the door and coming in and talking about different schemes and ideas. The truth is as we go through this, I think we’re not probably going to do any of them. I think that the best thing to do is simplicity. We may do one or some modified thing but I don’t think we’re going to do anything that would particularly engage (the) private equity world. 
The best thing is to get these companies spun out and to get them into the public markets, get their managements out there, so to speak, and taking care of their own businesses and talking to the investment community. I think that’s probably the better step forward for us at this point.