Update: You can stream or download the audio here. (62 min; 30 Megs)
I’m here at IAC (NSDQ: IACI) headquarters following the split announcement press conference, also being held by phone. Will be updating live.
— Why: Barry Diller: “It can not be said in a single sentence, ‘what is IAC?’.” Now that the internet businesses are mature, IAC can stand alone as an internet conglomerate. As for the others, HSN is turning around, Ticketmaster is doing well and Interval is a great business. LendingTree will come out of this (real estate/mortgage troubles) having gained share, particularly since many players won’t be there. LendingTree won’t be as virtual as it has been. “Remaining IAC will be a company of good earnings, good cash flow, pristine balance sheet.”
— Capital structure: By dividing the company into discreet operations, each company can now maintain a capital structure that fits with their businesses.
— Commercial relationships: The businesses that are being spun out will continue to maintain inter-company relationships, but they will also have flexibility to establish agreements with outside firms. Expedia is a good example: “The companies go their own ways”. Those relationships that make sense will be maintained, and those that don’t work will naturally die out.
— Boards and costs: Each company will maintain its own board; Diller is likely to be involved at the board level with one or two of the spun off companies. Because all of the companies are already fully staffed, dividing them is not expected to create much additional expense.
— Advertising market: Advertising revenue is a little more than 50 percent of IAC’s revenue, so the company is big enough to stand on its own as an internet firm. “Internet advertising is effective”. Internet advertising is still only 3 percent of media and it “ain’t gonna stay there”. “I couldn’t imagine a sector that has more wind at its back than online advertising”
— Still too complex?: I asked Diller whether the new, slimmed-down IAC will still be too complex. After a bit of a preamble he got around to his answer: “I do not think it takes a lot of explanation to say what it (IAC) is.”
— The building: In response to a question about IACI’s Frank Gehry-designed headquarters, Diller assured that the building will remain and that most of the businesses would remain in it. Though he added, jokingly, that the company could make a fortune if it sold it off. (Ed. Note: IAC co-sponsored our FOBM reception in the Gehry building’s lobby just last Monday.)
— Next area for IAC: “I’m excited about a lot, I really am.” Online gaming… real rich online gaming has yet to take off.
— Mobile: IAC recently launched its first, GPS-based mobile application. The company now has a manager on that, working to expand it across all of its brands.