Barry Diller planned to break his IACI (IACI) into several pieces. The company is a collection of cats and dogs so the move makes sense. TicketMaster can operate on its own. So can Home Shopping Network.
John Malone’s Liberty Media (LINTA), the controlling shareholder in IACI, does not like the idea of spinning off divisions of the current company to its stockholders. Liberty has taken IACI to court to try to halt that process.
All of this may have lead Mr. Diller to reconsider. His other option, which is to sell some of IACI’s businesses outright, may end up being the preferred path. According to The Wall Street Journal "Diller is in discussions to bring in outside investors or possible buyers for all four of the companies he plans to spin off including the HSN home-shopping cable network."
A review of the IACI 10-Q shows that some of the businesses may not be worth very much. The company has a market cap of $6.9 billion. Long-term obligations, net of current maturities, are a modest $823 million.
In the last quarter, IACI had operating income of $104 million on revenue of $1.156 billion.
The retail operations at IACI, primarily HSN, are not worth what they once were. In the last quarter, operating income at the unit fell from $50 million in the period a year ago to $37 million.
The IACI real estate businesses are a mess which is no surprise given the broader economy. Lending Tree had a drop-off in revenue from $106 million in the quarter a year ago to $63 million and operating income went from $15 million to a loss of almost $6 million.
The firm’s Match.com and Interval units make good money. The online advertising operations, primarily Ask.com, are modest and compete with much larger operations like Google (GOOG) and Yahoo! (YHOO).
Diller may decide that auctioning the company in pieces is his best alternative, but, based on the performance of a number of its units, the sum of the parts may not be greater than the market value of the company as it is.
Douglas A. McIntyre
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