IAC / InterActive's Barry Diller on The Spinoff Plan

IAC/Interactive (IACI) CEO Barry Diller is being interviewed at D: All Things Digital in Carlsbad by Kara Swisher. Here are some of the highlights.

• Diller describes his recent litigation with Liberty Capital’s (LCAPA) John Malone as a three-month clump if his life that he could have done without. Diller said he thinks they thought it would force them to sell an asset at a price below what it was worth.
• Diller is talking about his plan to slice IACI into five public companies. Diller says to take 30,000 employees who live all over the place into one culture that they can believe; he says you can't do that unless you are in a business like Procter & Gamble (PG) or GE (GE). He says the businesses in IACI are so disparate. Diller says on August 1 IAC will be five separate companies: HSN, Interval, Ticketmaster, Lending Tree and new IAC, which will be pure Internet. (But you knew that already.) Diller says no on else has multiple sites that relate to each other, but are businesses of their own. He says IAC has become expert at search optimization. Can take a company like Lexico in house, and improve results doing nothing other than things we kind of know how to do, he says.
• Diller says they likes to buy things, and start things. He says one thing you do is go where the trouble is, when you have lots of moving parts. There is always trouble, so time for doing the opposite, which is creating trouble, is relatively minimal. “I want to get back to that,” he says. “I’ve always been in the product business.” Always been in that product/editorial business. “If you have a good idea, and there is some underlying business purpose to it…you have to stay with it.” Diller is really excited about doing an original news product - the new venture with Tina Brown - but he is not giving up its name.
• Diller on Hollywood: “a community that is so inbred it is a wonder their children actually have any teeth.”
• Diller on the writer’s strike: Both sides are at fault. That’s self-defining. He says they did not accomplish anything.
• On Ask.com: The number 4 search engine property.
• On Microsoft/Yahoo: When a company gets a 60% premium offer, spends 3 months looking for an alternative, one side has to be smart and wily, and the other side has to be otherwise. (He won’t say which side is which.) “It is absolutely incomprehensible.” Diller said you would have to tell them stay with me, and I will get you more for your stock. If they stay independent - “which I doubt” - time will tell. Diller says “of course it is a good idea” for Microsoft (MSFT) to buy Yahoo (YHOO).
• Diller on Google: They are irrelevant to us. A different competitive set issue than for Microsoft, he says. If you are after scale, he says, that is one thing. For IAC, he says, “I believe our product is in most respects better.” He says the issue for them is building on the strength of ask, and asking questions. It’s used for references, and actual question queries. He notes that Google has 60% of search market, and far greater share of advertising. He says all IAC has to do is increasing queries. “I think we have a real chance to increase queries,” he says. “Eventually an opening will come, somehow, some way.” He says Google (GOOG) will not forever own 60%-90% of the search business.
• On the Facebook valuation: Private valuations for things are just willing seller and buyer; they don’t have any reality. It is not their valuation until they are out in the public market place. What it is “is a damn great service.” Diller says a few years ago, he thought nothing would interrupt “stories,” and the story-telling experience. He says it is very true for older people, but that interaction. He says Facebook is nothing more than the Princess phone 20 years ago.
• More on community: Diller says TripAdvisor - which is part of Diller-controlled Expedia  (EXPE) - has become a huge business. He says it is a better tool than most other things for travel advice.