Case Study #2 - IAC/InterActiveCorp Author: Sajal Mukherjee
Media Mogul Barry Diller, the Chairman and Chief Executive Officer of IAC/InterActiveCorp, has made a revolutionary career of extending the traditional boundaries of the media industry. IAC/Interactive is a media conglomerate specializing in e-commerce. Under Barry Diller’s leadership, IAC/InterActiveCorp went thru a rapid roll-up phase to emerge as a large conglomerate of diverse interactive commerce businesses, followed by a split into five different companies. The split was timely and has hopefully prevented IAC from occupying a place in a future edition of Billion Dollar Lessons by Carroll and Mui.
The Roll-up Phase
In 1992, after an illustrious career in the entertainment industry as an executive at ABC and Chairman of Paramount Pictures, Diller shocked the world by quitting his job as head of Fox. In 1995, Barry Diller was named Chairman and CEO of Silver King Communications, Inc., which would later evolve into IAC. Within the first year, Silver King merged with Home Shopping Network and Savoy Pictures Entertainment and was renamed HSN, Inc. From that point, he has pieced together the company through hundreds of acquisitions, spin-offs, and divestitures. This strategy of rapidly acquiring new divisions - and spinning-off unattractive ones – has not always been successful. IAC's revenues were approximately $6.4 billion in 2007, but profit margins at the internet giant had been slipping since 2005.
Diller realized that the collection of diverse businesses that included cable-TV networks, travel services, and mortgage lending was too complex to manage profitably. In 2007, the company decided to focus on its core competence - online search and content market, and spin off its other assets.
To achieve this goal, the company split into five public companies in 2008, with IAC retaining the Web properties. These are - IAC (InteractiveCorp - Internet Businesses such as Ask.com, Match.com, CitySearch.com), TicketMaster (Ticket sales and distribution company), HSNI (TV and Internet Online Shopping), Tree.com (the parent of several brands and businesses in the financial services and real estate industries including LendingTree®, LendingTree Loans sm, GetSmart®, Home Loan Center, RealEstate.com, iNest®, and RealEstate.com, REALTORS®) and Interval Leisure Group (a leading global provider of membership and leisure services to the vacation industry) .
IAC owns more than 50 Web companies, spanning across four business segments: Media and Advertising, Match, ServiceMagic & Emerging businesses.
Media and advertising offers search and advertising services. These services are provided by sites like Ask.com, Citysearch, Evite and it includes toolbars and applications through which these services are distributed.
Match segment provides online personals services, which typically provides a platform for dating services. Including the US, these services are provided across 40 countries in 15 different languages.
ServiceMagic segment operates a marketplace by enabling home service professionals to sell their services, ranging from simple home services to complete home building and remodeling projects.
Emerging businesses segment comprises early stage businesses which provide online content and other related services. The various websites operated under this segment include Shoebuy, Pronto, Gifts.com, Connected Ventures, InstantAction.com, VeryShortList.com, RushmoreDrive.com, Life123.com, The Daily Beast, etc.
Why did IAC fail?
As CEO, Barry’s personality can be considered to be a key contributor to IAC’s failure. He is a perfectionist, has an abrasive temper, and can be emotionally abusive. His personality parlayed into IAC - the business empire he created a result of his ambition was to build the world’s largest interactive commerce business. The $62 million, 10-story office building in Manhattan’s Chelsea District; that serves as the...
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