TCS Daily


Barry Diller's Search for Meaning...

By Dominic Basulto - March 31, 2005 12:00 AM

When Barry Diller's IAC/InterActiveCorp submitted an all-stock bid worth nearly $2 billion for search engine Ask Jeeves, analysts rushed to describe the move as an effort to tie together the far-flung pieces of an Internet conglomerate. The conventional wisdom is that Diller already owned a stable of Internet brands like Expedia, CitySearch and Match.com as well as assorted other assets like HSN, Ticketmaster and Lending Tree. What he lacked, however, was a way of tying together all of these assets with a single identifiable brand. For a relatively cheap $1.85 billion price tag, Ask Jeeves would become a way to unlock the hidden value of Diller's interactive empire.

In the technology sector, though, synergies rarely materialize after acquisitions. Diller is too smart a dealmaker to fall for the synergy argument or leap head-first into the online search market just because search happens to be the flavor of the month. The potential acquisition of Ask Jeeves is about more than just slapping a search box on every IAC property from Anyway.com to ZeroDegrees.com in order to create a common doorway to IAC's various interactive assets. While Diller no doubt hopes to convert Ask Jeeves search traffic into paying customers of IAC's other brands, there has to be something more on Diller's mind.

After all, Ask Jeeves controls only 3% of all Internet searches and is generally acknowledged as the smallest of the five leading competitors in the Internet search space -- and when was the last time that Barry Diller settled for fifth in anything? Diller's other Internet properties like Match.com and Expedia.com are all first or second within their respective verticals.

It is possible to think about search in several different ways. For Yahoo, search is a way of connecting users to content. For Google, search is the predominant paradigm for navigating the Web. Most likely, given Barry Diller's past life in the worlds of media and Hollywood, search means something vastly different than what it means for a pure technologist at a company like Google. Among the most interesting scenarios of what Diller plans to do with Ask Jeeves:

(1) Create a truly interactive retail empire to complement the IAC travel empire. Remember, Diller has intimate experience with both QVC Network and the Home Shopping Network. He also recently launched Gifts.com as a way to help shoppers find perfect gifts for people based on personality profiles. Using the popular Bloglines RSS reader (acquired by Ask Jeeves in February), IAC will be able to distribute e-commerce promotions for various IAC properties via RSS feeds.

(2) Move aggressively to extend search beyond the Internet. Given his background with cable TV and Hollywood studios, Diller would be more than capable of extending search beyond the Internet to include, say, cable TV. Many experts note that it's only a matter of time before the worlds of search and entertainment start to blur. Google, for example, is already working on a way to search TV programming and has expressed an interest in entertainment-related searches.

(3) Create an editorial content engine. Creating original content is expensive, so why not leverage the power of content syndication technologies like RSS? Using Bloglines in combination with Ask Jeeves search engine results, Diller might be able to take advantage of user-generated information on other IAC sites. He might also be able to monetize CitySearch through local search results or personalize local search results with aggregated content from his travel industry sites.

In the past, Barry Diller has been a deep thinker on the various changes evolving within different industries. Google "Barry Diller search" and you'll find a lengthy piece from Ken Auletta of The New Yorker, "Barry Diller's Search for the Future." After stepping down as the chairman of Fox, Diller embarked on a 10-month "odyssey" in which he spoke with moguls in seven different industries in order to decide where he should stake out his own future. The article was written in 1993, well before the Internet exploded into prominence, but Diller was already tinkering around on his Apple PowerBook, looking for "enabling technologies" that would help to unlock the value of interactive programming.

Other companies -- not just Barry Diller's InterActiveCorp -- have also been engaged in philosophical searches for meaning, as they debate the future of entire industries. In the first three months of the year, the New York Times Company acquired Web portal About.com for $410 million; three newspaper publishers (Gannett, Tribune and Knight Ridder) acquired a 75% equity stake in Topix.net (which aggregates news from 10,000 sources), and Viacom announced that it would split its media assets into two separate entities. The moves, taken together, are signs that traditional broadcast media assets (newspapers, TV, radio) are rapidly losing value and that, on the Internet, user-generated or aggregated content is a powerful form of original content. The lines between the Web and traditional media are blurring, as major players race to re-discover who they are.

If anybody can make the Ask Jeeves deal work, it's Diller. (At the time of writing, there was still speculation that companies like Google, AOL or even Walt Disney might submit a higher bid for Ask Jeeves.) If all goes according to plan, Diller's $1.85 billion bid for Ask Jeeves could transform industries like entertainment or travel, create new interactive opportunities for reaching users through search and, most importantly, create shareholder value for IAC investors.

The author is a TCS contributing writer focusing on technology and venture capital.

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