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Ever since Barry Diller cobbled together the internet Frankenstein called IAC/InterActiveCorp. (NASDAQ: IACI), he had been assuring investors that somehow it all made sense to group together TicketMaster with Evite with Ask.com. Wall Street cried confusion.Then the media mogul spun off his Expedia travel business into a separate company, figuring that was the reason why investors were confused by the ungainly IAC. Judging from the stock price, investors were just as confused as ever, even as IAC said it was "proud to have so many great brands under one roof." Now, Diller has thrown in the towel and is splitting up IAC into five separate publicly traded companies. As envisioned, IAC would be more or less a media and entertainment company, maintaining businesses including Ask.com, Citysearch, Evite, CollegeHumor and Bloglines. The other companies would be centered around HSN, TicketMaster, and Interval International.
Diller seems to have gotten the message from Wall Street, albeit about five years too late.
"We've been a complex enterprise almost from the very beginning 12 years ago, with hundreds of transactions over those years," he said. "And while we've created a lot of value, I've always believed our complexity and many mouthfuls of sentences to explain who we are and what our strategy is have hampered clarity and understanding with all our constituencies, particularly investors."
Plus, the confusion was costing Diller money.
IAC's shares are down more than 20% year to date, underperforming most major tech and media stocks because investors can't figure the company out. For instance, what does CollegeHumor.com have to do with the rest of IAC? Beats me. Meanwhile, Expedia Inc. (NASDAQ: EXPE), a pure play internet travel company, has soared more than 50%.
Some parts of IAC are clearly better than others. Hidden beneath the bureaucratic blubber at IAC are some great businesses such as Evite and Match.com. Maybe these companies will get a chance to shine under a new management structure. I am not so sure investors are going to be real keen on HSN, which has struggled, and LendingTree, given the horrible housing market.
At the end of the day, the one person who will come out on top is Diller. You can bet that he will continue to play a major role in managing all of the businesses he owns, regardless of their ticker symbols.
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