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AUSTIN, Texas - Media giant IAC/Interactive Corp. chairman and CEO Barry Diller is planning to split the corporation, which  includes Ask.com, Ticketmaster, LendingTree and the Home Shopping Network among nearly 60 other businesses, into five separate public companies. Diller's plan was announced Monday and will see the firm carving its four biggest divisions plus HSN into separate companies. Liberty Media Involved The breakup will allow Diller to get rid of underperforming parts of his empire, and at the same time alleviate some of the tension between himself and longtime financial backer John Malone. Malone's Liberty Media Corp. owns a controlling voting stake in IAC, while Diller has for some time operated under an agreement allowing him the right to vote in regard to Liberty Media's shares. Liberty Media owns a 24.1 percent stake in IAC, and that makes it the largest shareholder. The online lending business LendingTree has not performed at the level IAC had hoped. Malone has not hidden his desire to exit the arrangement with IAC. "There was time when there was, I think, a 20% Barry premium. Today you could argue there is a Barry discount," Malone said in a recent Wall Street Journal article. Reversing Twelve Year Trend The move represents a full turnaround from the past 12 years during which IAC has used numerous acquisitions to grow, and will allow Diller to focus on the most successful of his Internet businesses, which he plans to keep within the IAC name. Ask.com, Match.com and Citysearch are among the most rapidly growing of the businesses and will remain with IAC, while underperformers HSN, Ticketmaster and LendingTree will each before separate public companies. HSN has performed poorly largely due to mistakes in management, while LendingTree has  been hurt by the U.S. housing slump. Vacation time sharing business Interval International will also be leaving the IAC umbrella. It it unclear at present who will control the companies IAC is spinning off, however IAC shareholders are expected to be given shares in the new companies. Work Ahead for Diller, Malone Diller's voting agreement with Liberty Media will not automatically apply to the companies that are leaving IAC, which is expected to result in Malone being able to take control of those he has an interest in. IAC and Liberty are expected to enter into negotiations, with Diller seeking to keep his voting control in one or two of the companies being spun off, according to comments he made during a recent interview about the planned company division. For the past few years the relationship between the two companies has become strained and IAC has seen slow growth on the stock market. Talks between IAC and Liberty earlier this year aimed at giving full control of HSN to Liberty in exchange for Liberty giving up most of its stake in IAC failed, in part due to Malone having trouble with HSN's low performance levels. Liberty also owns HSN's largest competitor, QVC. The HSN Element By splitting IAC into five separate companies, Malone might end up with HSN, and he sees the value of the parts in this case exceeded that of the whole. "From our point of view, each one of these businesses will be more valuable," said Malone in a recent Wall Street Journal article. After Diller's attempt to sell HSN to Liberty fell through, the network started seeing improved performance, which led to recent talks that culminated with board members voting to approve the deal last Friday. Diller's Rise and Acquisitions Diller rose to prominence in the business world beginning in the 1990s with television station deals, followed by a successful stint leading Paramount Pictures and News Corp.'s Fox network, before moving quickly to acquire Internet companies. IAC's stock prices stagnated in 2003, leading Diller to sell online travel company Expedia. The latest IAC quarterly earnings report was released last week, and shows that the company's Internet and advertising businesses, such as Ask.com, are doing well, while the rest of the businesses did not do as well. IAC and Wall Street Journal publisher Dow Jones & Co. have announced a partnership to launch as personal finance Web site. The IAC Internet Companies Diller is expected to focus his efforts on the 40 web-related ventures which will remain under the IAC banner, including the following:  | Ask.com | | | Online games | | | Vimeo.com video site | | | CollegeHumor.com | | | Match.com | | | iWon | | | Evite | | | Excite | | | Citysearch | | | Zwinky | The New Five Companies The first company is HSN, and will include HSN TV and hsn.com, along with the stores, Web sites and catalogs of the Cornerstone Brands. Interval International will now include VacationSource.com, Resort Quest Hawaii and CondoDirect. Ticketmaster will include TicketWeb, Admission.com and others. LendingTree will encompass all of IAC's real estate businesses. The fifth company will be IAC itself, retaining Internet and media businesses, with Diller remaining as chairman and CEO. Ask.com a Top IAC Performer On Monday Diller and IAC announced a new five year sponsored listing agreement with search leader Google, which he estimates to be worth $3.5 billion. Diller sees validity in Internet advertising and hopes splitting his conglomerate will allow him to focus on an area that he appears enthusiastic about. "What makes me think it’s valid? Everything I see, hear, know, read and think… Right now, video advertising is about 3 percent or 4 percent of a big ad pie. Well, I promise you one thing: It ain't going to stay there at that level very long. It’s going to grow… I couldn’t imagine a sector that has more wind at its back than online advertising," said Diller in a conference call. $10 Billion IAC Splits Five Ways Hoping to Grow Although Ask.com holds a relatively small share of the Internet search market, accounting for roughly 5 percent of Web searches in the U.S. according to tracking firm comScore Inc., it may well be Diller's best bet in the newly reorganized IAC empire. Stockholders will now be able to choose to back any or all of the five new companies, no longer saddled with having to support all of to 60 companies in the IAC conglomerate. Related Links:
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11:56 pm on Nov. 8, 2007 (utc 0)