Diller's Banana Split

If you walk into Barry Diller's ice cream parlor in a few months, you will finally have a say in the flavors you want to consume. The eclectic collection of properties that make up Diller's IAC/InterActiveCorp (Nasdaq: IACI) media empire will be split into five distinctive cones.

In short: Goodbye, vanilla.

It's about time, really. If an investor is pumped about the prospects of the Ask.com search engine, it never made sense to hogtie that buyer to the steady-yet-clunky Home Shopping Network or subprime-battered LendingTree. By the same token, if someone believes that the talent-driven transformation driving Live Nation (NYSE: LYV) can also rub off on fellow concert promoter Ticketmaster, why should an IAC investor be forced to buy into time-share swappers or online dating sites?

This isn't the first time that Diller has scooped out a sector. Expedia (Nasdaq: EXPE) spun off from IAC a little less than three years ago. Diller's odd portfolio has proved to be a growth vehicle, but an unwieldy one. (Just have a look at IAC's latest quarter.) It's a banana split -- but not the good kind with ice cream, whipped cream, and a maraschino cherry on top. We're talking prunes, sawdust, and trial balloons as toppings.

So what are the five new flavors at Diller's scoop shop going to be?

• IAC, which will watch over the fast-growing Ask.com search engine and the social websites that include CitySearch, Match.com, and College Humor.
• Ticketmaster, which will rock on with its ticket sales here and abroad.
• HSN, which will keep the retail outlets hopping.
• LendingTree, which will complete the "out of favor" milkshake by taking on RealEstate.com.    
• Interval International, which will watch over the vacation travel subsidiaries.

Investors should find what they like in any of the five standalone companies. The split will also give each company a little more breathing room. If a timely acquisition is out there, it won't just feel like one more jigsaw piece within an ever-growing puzzle. If Interval International wants to buy Travelzoo (Nasdaq: TZOO) to expand its Web-based travel offerings, hey, go for it! If LendingTree and RealEstate.com want to snap up Move (Nasdaq: MOVE) or ZipRealty (Nasdaq: ZIPR), bring on the moving vans and make it happen.

Some of the appendages may not see the light of day. QVC parent Liberty Media Interactive (NYSE: LINTA) would probably love to swallow HSN whole. It doesn't hurt that Liberty already has meaty ownership claws in IAC. Ticketmaster may look sweet on the arm of a major label like Warner Music, as the industry realizes it can't live off record deals alone when the real money is in the arena tours.

It's OK to speculate now. Everything is possible. Diller's scoop shop now has a menu of options. What it had before? Well, that was just bananas.

Ready for seconds?

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