IAC wades deeper into content production

Ben Silverman's new company named Electus

NEW YORK -- Barry Diller's IAC is ready to carefully invest in content production to make content a potential new core business.

"Our commitment to this area is real, and we're going to invest," Diller said during his Internet firm's third-quarter earnings call.

He suggested the investments would likely be "less than 10%" of the about $1.8 billion that IAC had in cash as of Sept. 30 over the next several years.

IAC's emerging content businesses include such things as CollegeHumor, Tina Brown's the Daily Beast and a partnership with Ben Silverman on his new production outfit, whose name Diller confirmed as Electus on Tuesday.

"There is tremendous opportunity in media going forward, at least in our version of media," Diller said. He described IAC as focusing on content production "for the Internet and more historic distribution" forms of media, although with the digital age's lower-cost sensibility.

Asked if the focus will be on short form content only, Diller said: "We have ambitions to produce content of all lengths." He also hinted at potential more cable TV content being in the works after MTV bought "The CollegeHumor Show" last year.

Premium content will in the future not depend on the current online display ad model, but yield different types of revenue, Diller predicted. He signaled that they could include such things as premium-priced ads, subscriptions and transaction revenue,

On the conference call, Diller also said IAC recently held discussions over the course of several months with major shareholder Liberty Media, controlled by John Malone, with whom Diller had had a fallout. That could have led to a major buyback of shares from Liberty, which has been reducing its stake in IAC, but it fell through due to technical "obstacles" that Diller didn't specify. However, he said both sides had the willingness to reach a deal. Liberty is known for only doing deals that are tax-efficient.

IAC swung to a third-quarter profit as the Internet firm bounced back from year-ago writedowns caused by a split into five separate companies.

The company on Tuesday reported a quarterly profit of $21.3 million, compared with a year-ago loss of $15.2 million. The latest result included $35 million in gains from the sales of Match Europe and shares in OpenTable. Revenue dropped 9% to $336.6 million amid weaker ad trends due to the recession.

Diller called the results "a solid quarter given the environment."
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