Diller Wins His Court Battle - But Can IAC Succeed?

Barry Diller won a court battle Monday against Liberty Media’s John Malone. Now Diller can finally go ahead with his plan to break up InterActive Corp. into five pieces—HSN, Ticketmaster, Lending Tree, Interval International, and the new IAC (Ask.com, Bloglines, Citysearch, Evite, iWon, Match.com, BustedTees, Vimeo, GarageGames, and CollegeHumor). Malone, IAC’s largest shareholder, was trying to prevent the spin-offs from happening.

Whether the financial maneuver will “unlock” any value for shareholders remains to be seen. (I’d be surprised if it did). But there is no doubt that IAC is an unwieldy, multi-headed beast whose collection of disparate businesses never really had much to do with one another. As I reported last November:

Diller will continue as CEO and chairman of IAC, which still remains somewhat of a grab bag of about 30 Websites. But at least those businesses are starting to finally be able to stand on their own feet. It doesn’t make much sense for them to be weighed down by Lending Tree because of the mortgage credit crisis or overshadowed by the Home Shopping Network. IAC’s holding company model gave shelter to its startups with the earnings of its more established operations, but any troubles in the larger businesses are difficult for the smaller ones to overcome no matter how fast they are growing.

The problem, as came out during the trial, is that those underlying Web businesses are not growing as fast as Diller had hoped either. Ask.com failed to reach its goal of doubling its market share of search, and Ticketmaster missed out on the growth of the secondary ticket market and recently had to buy TicketsNow for $265 million to compete with StubHub (owned by eBay).

Can an independent IAC compete more effectively against Web startups, or is it just a collection of Web 1.0 dogs?

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