The delicate balancing act that Barry Diller's new media empire has become -- with laggards holding back leaders and leaders bailing out laggards -- is coming to an end.
"We are now right around the corner from the separation of IAC into five separate companies and the dissolution of the complexity surrounding the combined structure," notes IAC's
In other words, it's time to start picking sides. Do you want the HSN shopping hub or the travel-happy Interval International? Do you want to rock out with Ticketmaster or take a chance on the problematic LendingTree (a spin-off that IAC is mercifully renaming Tree.com as it strips away the tainted "lending" tag.)? If those four flavors don't tickle your taste buds, you can always stick to what will be left of IAC: A collection of Web properties that include the Ask.com search engine and the Match.com online dating enabler. It will all be possible once the split is complete.
Diller is right about cherry-picking through the results. They just don't make a whole lot of sense in lump-sum fashion. After all, IAC's second quarter saw revenue climb 7% higher to $1.6 billion. Adjusted earnings fell by 2% to $101.3 million, or $0.35 a share. It paints a still-life portrait, when IAC is more like a moving picture.
Let's break it down.
The five amigos
HSN, which is the biggest top-line contributor with 44% of the total revenue, grew by 2% during the quarter, but that's the result of a sharp dip in its Cornerstone retail division slowing down double-digit percentage gains at the namesake home shopping icon.
Ticketmaster was the biggest gainer, up 30% on the top, but half of that gain is attributable to a pair of recent acquisitions. It is still an impressive organic showing, with the company moving 7% more tickets at 10% higher price points.
Interval International's 20% revenue spurt was also aided by last year's purchase of ResortQuest Hawaii (which also accounted for roughly half of the gain). The acquisition wasn't a complete blessing, as it held profits back given airlines cutting back on their flights to Hawaii.
Tree.com, the ugly amalgamation of LendingTree.com and RealEstate.com, was exactly the sandbag that one would expect it to be. Operating losses widened on a 47% revenue dip.
That leaves New IAC, the Web-smart collection of Diller's Internet properties. Revenue climbed by 11% in a tricky environment, helped out by the renewed partnership with Google
After the split
Diller may be encouraging investors to pick out their favorite appendages, but the advice will probably be heeded by acquisitive corporations too.
Every spin-off has the potential to get snapped up.
Concert promoter Live Nation
That leaves HSN. I don't know if regulators would let Liberty Media's
Naturally the buying interest may flow both ways. As stand-alone companies, it may be IAC's babies that are on the prowl for non-organic growth plays. Either way, things are about to get really interesting once IAC becomes five dynamic entities.
Leaders will lead. Laggards? Well, they're just going to have to help themselves out of the gutter.
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