Barry Diller is one smart man. Nothing new there, not the first to say that.
The gentleman who started his career in William Morris’ mailroom climbed all the way to now being recognized as one of the main online players around.
The company he now leads, InterActive Corp., has had as many lives as your luckiest cat: Home Shopping Network used to be the main thing, I recall… and then it was Expedia. Of course, who can forget the acquisitions of Lending Tree and the spin-off of Expedia, and then there was…
Wait, are you getting dizzy yet?
You should. Hanging around Tenacious D - as for some reason we have started to affectionately call Mr. Diller - is a dizzying experience. Rumor had it a few weeks ago (not months folks, weeks!) that he was trying to win over Facebook’s CEO Mark Zuckerberg and failed to make up for missing out on MySpace:
“We looked at [MySpace] and decided we didn’t want to go there, either dumbly, or not. Time will tell.” Diller said.
Well, even though we recently pegged MySpace as the best online acquisition ever (mainly over the $900M ad deal it allowed News Corp. to sign with Google, though), we’re not sure anyone should be blamed for missing out on MySpace, after all, sexual predators have a limited shelf life. Of course, Viacom boss Sumner Redstone did blame his lieutenant Tom Freston for missing the MySpace train, but that was unfair.
Anyway, to suggest that Barry Diller likes to do deals and acquire companies is like saying Rosie O’Donnell likes cake. The point is: it’s an understatement.
But Tenacious D knows that his stock his hot, especially after his latest acquisition: Ask Jeeves (disclaimer: we used to own IAC after owning ASKJ ages ago and IAC bought ASKJ but got rid of it recently as it hit $30). Diller bought the #5 search engine, dropped the butler mascot and now has the #4 player in the red hot field of search. Must have been all the excess weight (cake anyone?)
But, Diller is smart and knows that a #4 search player is not going to cut it to keep his stock up. He sees old nemesis Rupert Murdoch’s stock being up some 25% this year after its acquisitions of IGN, MySpace and Scout and wants in on the action… [Diller left Murdoch’s company after the Australian-born media baron refused to cut Diller some equity in News Corp.]
But with some Web entrepreneurs feeling good about themselves again, low startup costs and a booming online advertising market, Diller knows he needs more than a good eye to find diamonds in the rough; he needs to knock down the prices of some of the gems and trip them in the dirt.
It’s not solely that the supply side does not necessarily want to cash out, it’s that the supply side is loading up on M&A experts to scoop up digital assets (CBS lures Quincy Smith, Viacom lures Philippe Dauman, Google and YHOO are always takers, etc) and Diller knows that the increase in attendance at the auction house will drive prices up.
So, what does Tenacious D. do?
He comes out and says that:
“We don’t see anything big to buy,” Diller told the Reuters Media Summit in New York. “We think that prices right now for most things Internet … are very overpriced at various stages from early capitalisation to venture capital stage.”
That’s clever. Earlier in the day, instead of coming out and saying that IAC is looking to make a move in social media or online news, he first comes out and says that he wants to start something new in news (which he might and should) and then in the afternoon comes out and says that prices are expensive.
Genius!
Considering that Chief Acquisitions Officer Ross Levinsohn stepped aside at News Corp. (suggesting the shopping spree at News Corp. is over), finally the media barons are realizing that showing too much of their excitement over digital assets is a bad idea: it only adds to the frothiness.
There is no doubt that Misters Dauman and Smith are experienced M&A veterans, but it will indeed be interesting to see how the man who rose the ranks in Hollywood all the way down from the mailroom of one of the most venerable talent agencies will fare against the polished lawyers.
Gotta love business.
Disclosure: All right, how can this be worded to balance ethical disclosure and not burning any bridges: Of the companies mentioned above, one is involved in litigation against our parent company and one has shown some degree of interest in our parent company, Mojo Supreme in the context of this article. Even if these were not so, we would still view Mr. Diller (or any senior manager’s claim that Internet prices are expensive - when they are adding to the rise in asset prices) with the cynical view we outline above. Lastly, I own shares in YHOO and owned shares of IAC up to last month.
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