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November 5, 2007
IACI: Making Sense of the Divestiture Thing
In looking at the IACI divestiture plan announced today, here are two columns, the left one containing the company CEO Barry Diller's keeping, and the left one containing the ones he is spinning out as 100%-owned companies.
| Keeping | Spinning |
| Ask.com | LendingTree |
| CitySearch | Interval International |
| Evite | Ticketmaster |
| Excite | HSN |
| Match.com | |
| ShoeBuy.com | |
| Zwinky.com | |
| A host of investments |
He's essentially spinning out the largest standalone groups, while keeping the more explicitly transactional search/ad-related properties. Diller's incubator strategy redux, apparently.
On the other hand, this is the most complex such deal I have seen in eons. It will be very tricky coming to defensible valuation of the mess, so expect the stock to get whipsawed over all the map. Further, some will read this has a statement that LendingTree, Ticketmaster, et al., are mature and less interesting, and that's the only reason they're being pushed out.
Overall, IAC/Interactive has never really made much business sense, and this doesn't really fix that. We go from a crazy complex quilt of unrelated companies, to another crazy complex quilt of unrelated companies -- with a few wholly-owned unrelated subsidiaries. I'm not against it, but it doesn't solve the problem that IAC/Interactive is sort of the anti-GE conglomerate: Never first or second in any of its businesses, and happy to be that way.
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As a former EXPE employee (I left just after the IACI acquisition of EXPE), I tend to agree that IACI could be much better run.
However, where are your facts when you say IACI is "Never first or second in any of its businesses, and happy to be that way."?
CitySearch: #1 local city guide online
Evite: #1 online invitation service
Ticketmaster: #1 ticket seller online
Ticketmaster: #1 ticket seller, offline
LendingTree: #1 loan matchmaker in the world
Match.com: #1 online dating site
Expedia.com: #1 online travel site
TripAdvisor.com: #1 online travel research site
HSN: #2 interactive television shopping service
Sure, Ask.com is #5 or so. And that's important. But aren't you ignoring some of the #1's above?
Paul,
As an ex-EXPE employee and shareholder with a little bit of IACI still remaining, I agree with some of what you write -- Diller has had trouble getting the synergies to happen. Personally, I think this is because he's primarily a media guy and not a product guy, but that's another story.
However I must take issue with your suggestion that the company is never first or second in anything.
What? Where do you get your facts?
Ticketmaster is #1 in ticket sales in the US online. Ticketmaster is #1 in ticket sales offline.
LendingTree is #1 or #2 in the "help you get a loan" business.
CitySearch is the #1 local city guide.
Match.com is the #1 online dating site.
HSN is the #2 television shopping channel.
Evite is the #1 site used to plan events online.
Expedia is the #1 online travel site. TripAdvisor (owned by Expedia) is the #1 site used for researching travel.
etc.
Care to elaborate on where you get your facts?