Tuesday, January 29, 2008

Battle for IAC (and ASK) is on - Bye, Bye Barry ?

The Wall Street Journal is reporting that Liberty Media Inc. has filed court papers to 'remove' Barry Diller from the helm of IAC / Interactive Corp.

A few observations and retrospective.

I have been an IAC (NASDAQ:IACI) watcher for a long time. Why? Over 80% of my personal income the last 5 years has come from travel SEM and SEO.

Now traded as separate companies, the IAC's travel group (which includes Expedia, Hotels.com, Travelnow, Hotwire and yes, TripAdvisor), has been feeling the heat of a general downturn in US leisure travel, changes in search engine algorithms that put 'some' hotels at the top, as well as sector PPC buy programs such as Yahoo Travel.

Regional independent hotel consolidators are challenging on a local level as well.

Proprietary deals are ongoing by competitors such as Travelocity (Can anyone say AARP?). Travelocity's latest move to win over regional travel bureaus (known as CVBs) and others is gaining ground.

It was a good move for IAC to separate this group should something happen.
It did.

Yesterday came news that IAC was taking a stake in the HealthCentralNetwork. Microsoft is well-along with it's 'Health' project and Google is too. The are numerous other established players in this space.

A few months ago, IAC announced it was spinning off the remainder of it's operating units as separately traded companies. Liberty was supportive at the time.

I'm not implying (at all) that Barry Diller isn't a respected CEO. We've featured lots of stories on IAC (including their very cool building in NYC) right here. Frankly, Diller, to many, is practically an icon.

Welcome back to Wall Street and who owns what. When a company doesn't perform, or, in this case a group of companies, someone's going to take a fall. This time, it looks like it might be 'the big guy'.

Sidebar: Liberty has positions in both QVC and HSN. HSN is part of IAC.

Is this getting confusing ?

I think 'Diller watchers' would agree. If Liberty succeeds, Diller will be back and that will be the interesting chapter.