That's Entertainment, IAC

By Rick Aristotle Munarriz | More Articles
June 4, 2008 | Comments (2)

Barry Diller's new media empire will continue to be entertaining but no longer Entertainment.

IAC (Nasdaq: IACI ) is selling Entertainment Publications to a private equity firm in a deal valued at about $135 million after the accompanying tax benefit is applied.

You're probably familiar with Entertainment Publications. If you've ever owned one of the city-specific Entertainment books -- available through the company, but typically sold as a fundraiser or at certain retailers -- you've thumbed through the publisher's handiwork.

The allure of half-priced hotel stays or steep coupon discounts at area eateries and retailers makes the book a good value. Everybody wins, too. The buyer gets big price breaks. The bookseller gets a piece of the sale. Participating discounters attract incremental business.

You know it's a good business when the company hasn't fallen for the temptation of turning its Entertainment.com domain into a stickier leisure portal. Then again, seeing how Hollywood Media (Nasdaq: HOLL ) has struggled with profitability at Hollywood.com, and how CNET Networks (Nasdaq: CNET ) achieved little with TV.com until it acquired TVTome.com, maybe the deals publisher is onto something by keeping Entertainment.com true as a promoter of the thick coupon books.

Shedding Entertainment will help the company's bottom line. Operating income before amortization clocked in at $13.9 million and $8.9 million in 2006 and 2007, respectively. The result was an operating loss for the division.

This move will also help Diller's plan to split his empire into five standalone units. Entertainment was slated to be part of the New IAC arm, loaded with its online growth darlings like Ask.com, Citysearch.com, and Match.com. It won't have Entertainment slowing down the cyberspace-powered engine there anymore.

Will more deals be made before the split? It's always possible. I have suggested that Ticketmaster would look good on Live Nation's (NYSE: LYV ) arm. Timeshare-week-swapper Interval would be an ideal addition to Wyndham's (NYSE: WYN ) RCI. Even IAC's problematic Lending Tree and RealEstate.com may find a suitor between ZipRealty (Nasdaq: ZIPR ) and HouseValues (Nasdaq: SOLD ) .

The move to split IAC into manageable chunks is a good one. If the price is right there is nothing wrong with IAC selling more of its empire piecemeal. And if the price isn't right, maybe IAC could use one of those coupons from the Entertainment books it no longer owns.

More discount Foolishness:

Best Odds in the Universe!
If you're interested in a 98.79% chance at beating the market... and a 70.84% chance at DOUBLING the market's return – Motley Fool Supernova could be just what you're looking for. And get this: We arrived at these odds from 10,000 random back-tested portfolios composed of Motley Fool Co-founder David Gardner's personal stock picks.

It's why David recently handpicked a small team of world-class portfolio managers. You see, he thinks these odds can get even better! And he'd like to prove it to you...

Simply enter your email address. And the answer to the question everybody is asking will be delivered to your inbox!

CNET Networks is a Motley Fool Rule Breakers recommendation. Try any of our Foolish newsletters today, free for 30 days.

Longtime Fool contributor Rick Munarriz has no problem with niche-specific search engines that bring up something new. He is a freelance contributor to IAC's Citysearch, but has no financial stake in IAC or in any other company in this story. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.

Read/Post Comments (2) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment icon found on every comment.

Report this Comment On June 09, 2008, at 12:17 AM, runthemarket wrote:

This is not a good sale. This is just another example that Diller is not the dealmaker that he is played up as. Entertainment Publications is another disaster in the IAC story. They purchased it for around $335 million in 2003 and now they sold it for $135 million (after the "accompanying tax benefit is applied" which I assume inflates the sale price).
"You know it's a good business when the company hasn't fallen for the temptation of turning its Entertainment.com domain into a stickier leisure portal." That was the line used in the article. All you have to do is look at IAC's filing for the last few years to see that comment is far from the truth. This company has been in a free fall.
Report this Comment On June 21, 2008, at 7:16 PM, fooboobear wrote:

Morale among employees has been up since the sale- IAC was very controlling of corporate culture and also liked to force it's technology choices on it's children companies.
You can see this "circle in square hole" mentality elsewhere- for example, they moved the fiscal year to align with IAC, despite the fact that it leaves EPI profitless the first half of the year and praying that their business plan works. Before the sale, the fiscal year started in July, so they'd know at the midway point of the fiscal year whether they'd be able to make ends meet and adjust accordingly.
I know many people within the company are glad to see Mr. Diller gone.

Add your comment.

Compare Brokers

Fool Disclosure

DocumentId: 658209, ~/Articles/ArticleHandler.aspx, 2/14/2012 7:23:23 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 9 hours ago Sponsored by:
	DOW	12,874.04	72.81	0.57%
	S&P 500	1,351.77	9.13	0.68%
	NASD	2,931.39	27.51	0.95%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes