February 7, 2007 11:06 AM PST
Diller's IAC to spend big on Net content
At the Media Summit conference here Wednesday, Diller, chairman and CEO of InterActiveCorp, boldly announced that he is pleased with his company's recent quarterly performance and that he plans to invest a "couple hundred million dollars" on mostly homegrown content creation.
"We think it's a perfect time (to invest)," Diller told the audience. "We'd buy something if something we saw was rational...We've built our company through acquisitions, but valuations have gone crazy. There's enormous froth there. How can it be rational?"
The one-time Hollywood wunderkind (he ran a studio by the age of 32) whose list of accomplishments include thinking up made-for-television movies and overseeing the production of Raiders of the Lost Ark and Saturday Night Fever has been trying to make the same kind of magic--and money--with the Internet. He's even enlisted the help of former General Electric CEO Jack Welch.
So far, his online efforts have yielded mixed results. IAC reported on Tuesday that a one-time charge of $214 million in the company's entertainment publication unit contributed to a profit shortfall.
Analysts have scratched their heads at some of Diller's decisions. His company's acquisition of Ask Jeeves, (now known as Ask.com) in March of 2005 put it in direct competition with Google. Investors are curious to know how Diller's 65 brands will work together. IAC owns online companies specializing in financial services (Home Loan Center), dating (Match.com) and retailing (HSN).
On Google, Diller said he still believes that a true challenger in search will emerge with new ideas--if not Ask.com, then another search specialist. He doesn't believe Google's enormous lead or size will matter much.
"I thought that competing with (fewer) resources is not a bad thing," Diller said. "It's a good thing."
And while most of his success came while in the movie business, he had few good things to say about video sharing. Diller was asked for his take on Viacom last week demanding that Google's YouTube remove 100,000 clips featuring its movies and TV shows.
"I would have said (to YouTube), 'Let me be clear with you. You are not going to take the stuff that we made in our house and control it for other people," Diller said.
A former chairman of Paramount Pictures, Diller believes that the exchange of amateur videos on the Web is never going to be as interesting or successful as bankrolling creations--"produced by professionals that know how to "make you laugh or cry--that is where this will develop."
As for operating an Internet venture, Diller has enlisted some help by bringing on Welch as a consultant. The two meet to do operating reviews four times a year.
"When he's on-site, he runs our company," Diller told an amused audience. "I've seen lots of managers, but he's the best manager ever invented."