Diller nurses HSN wounds with gaming

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Rupert Murdoch wasn't the only Hollywood mogul grilled by investors Tuesday at the Goldman Sachs Communacopia conference.

Barry Diller, chairman and CEO of IAC/ InterActiveCorp, gave a refreshingly candid assessment of the state of his company, and Viacom president and CEO Philippe Dauman took the hot seat just after Murdoch.

Diller said that HSN has had a "self-inflicted" difficult year and that his LendingTree property is feeling the effects of the credit market crunch.

However, he talked up IAC's acquisition of GarageGames — an Oregon-based gaming site — that will provide the technology for the new InstantAction.com network. Diller has high hopes for the initiative, announced Tuesday, which he said will make "high graphic" games available on the Web on a downloadable basis and create a "vibrant" community of gamers.

He added that his Ask.com search engine, which continues to rank behind MSN, Yahoo and Google, will continue to grow in market share. Diller also was confident that Ask.com will be "very profitable" next year.

Diller's Q&A ended with his predicting a transformation of the broadcast and print ad industry, saying that the Internet will change everything.

"These businesses absolutely have to be challenged," he said. "All this is going to crack and change over the next few years."

A noticeably smaller crowd heard Dauman offer a rosy view of Viacom slightly more than a year after he took control.

Dauman said Viacom is on track to exceed $500 million in Web revenue for this year and that it is pursuing a strategy of "judicious small acquisitions" and "aggressively" buying back its stock. He also defended MTV's online strategy of verticals and said that his company believes that this is in line with how the Internet is developing.

Dauman said that MTV Networks was plagued by "complacency" before he took over and that it has taken steps to reinvigorate its programming, with its recent MTV Video Music Awards as an example. He said ratings were up on TV and on the Web for the event, which took place in Las Vegas for the first time and featured a widely panned performance from Britney Spears and an off-camera fight between Tommy Lee and Kid Rock.

On the movie front, Dauman said he was very happy with his DreamWorks and Paramount releases. Viacom's contract with DreamWorks, however, runs out at the end of 2008, and Dauman conceded that he could lose this company.

Still, he said was excited about next year's "Indiana Jones and the Kingdom of the Crystal Skull," Steven Spielberg's fourth installment of the franchise, and that his company is "doing everything possible" to make the director and DreamWorks principal "happy."
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