IAC breakup will spin off 4 companies

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NEW YORK --- IAC/InterActiveCorp, the Internet conglomerate run by Barry Diller, said Monday it will break itself into five publicly traded businesses -- an indication the media mogul's plan to build a multimedia empire has failed.

The announcement drove IAC's shares up more than 7 percent, as Mr. Diller explained the split would mean the independent businesses would answer more directly to shareholders.

"In a sense, I felt we were running a false game," Mr. Diller said as he made the announcement Monday, referring to IAC's current structure that dictates that it manage about 60 brands in a diverse array of businesses.

The New York-based company plans to spin off its HSN home shopping network, Ticketmaster ticketing service, Interval time-share business and LendingTree mortgage referral units.

Roughly 30 Web-only brands -- including the Ask.com search engine, Match.com, Evite, Citysearch and Excite -- would remain part of IAC.

Mr. Diller also announced that IAC had reached a renewed deal with Google Inc. to continue as its advertising-listings provider for another five years. He estimated that deal's more favorable terms would bring in more than $3.5 billion in revenue, a key reason the company felt the Internet-only part of the business was ready to operate on its own.

Mr. Diller will continue as CEO of IAC. He said he would have a role in one or two of the spun-off companies, but he wouldn't say which ones.

"While we've created a lot of value, I've always believed our complexity and many mouthfuls of sentences to explain who we are and what our strategy is have hampered clarity and understanding with all our constituencies, particularly investors," he said.

Mr. Diller said the variety of the divisions left IAC vulnerable to investor anxiety if one performed poorly, as LendingTree did in the most recent quarter.

IAC will keep substantially all the company's cash, and IAC shareholders will own 100 percent of the equity in all five companies.

The transaction is expected to be completed in the second or third quarter of next year, Mr. Diller said. He said that in the coming months he would offer more details on how the transaction would be done.


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