Barry Diller: IAC's Media Businesses Will Turn Profitable
NEW YORK – Online company IAC on Wednesday reported improved second-quarter financials as chairman Barry Diller predicted that the Newsweek/Daily Beast joint venture and the company's media unit would turn profitable over time.
"We're in the best shape" the company has ever been in, Diller told a conference call and said IAC's media business, which includes Ben Silverman’s multi-media production outfit Electus, production firm Notional and CollegeHumor, among others, has been doing well despite being run like a group of start-ups and is on its way to eventual profitability. Highlighting that the media unit's revenue last year was in the mid-$200 million range, Diller said that if things continue on a positive trajectory, "we sure are going to turn profitable in media." He didn't provide any timing guidance.
Asked about his willingness to accept losses at Newsweek/Daily Beast, Diller predicted "reasonable losses" in the $50 million range until the venture breaks even, which he estimated to happen in the next year or year and a half. The company doesn't break out exact figures right now as the financials aren't material, but in three to five years, "you are going to be hearing" about it as results could become "quite substantial," Diller said. "We're starting to get advertising back into rhythm," and subscribers are stabilizing and starting to grow, he said about Newsweek.
IAC's higher second-quarter profit came amid growth in its big segments Match.com, the online dating site, and Internet search, while its media businesses posted mixed results.
IAC’s quarterly profit of $42.4 million was up 212 percent from the $13.6 million recorded in the year-ago period as revenue rose 23 percent to $485.4 million.
In the company’s “media & other” segment, which besides Electus, Notional and CollegeHumor also includes some miscellaneous assets, revenue increased 19 percent to $60.8 million, but its operating loss widened slightly from $3.0 million to $3.2 million. The revenue gain was driven by growth at Electus, Notional and other businesses, while increased operating expenses at Electus contributed to the loss.
The unit’s year-ago operating loss included losses related to The Daily Beast, which earlier this year entered into a joint venture with Newsweek. IAC’s 50 percent in the venture is now accounted for in an item on the profit statement that is called “equity in losses of unconsolidated affiliates. In the latest quarter, that loss amounted to $8.7 million, but the company didn’t break out the Newsweek/Daily Beast contribution.