Ask.com, Vimeo.com and Match.com may seem like unrelated
websites, but there's one thing they have in common: They're
owned by media conglomerate IAC.
New York-basedIAC (
) owns more than 150 Internet brands in the areas of search and
applications, personals, local, media and other. Additional names
include About.com, Dictionary.com, Chemistry.com, OkCupid.com,
CityGrid.com, HomeAdvisor.com and Tutor.com.
IAC is the seventh-largest site network in the world. Its
websites get over 1.1 billion visits and more than 346 million
unique visitors per month. The company is headed by longtime
entertainment figure Barry Diller.
"What's interesting about the company is that they've
historically been referred to as a multibusiness business," said
analyst Scott Kessler of S&P Capital IQ. "You don't
necessarily know the IAC name or brand, particularly if you're a
consumer in the marketplace. But it's a huge number of
interesting and compelling Web properties."
The company has been around since the mid-1980s and has gone
through various growth spurts, involving many acquisitions and
spin-offs. In the early days, its acquisition strategy was pretty
aggressive. But that strategy was fraught with risks, says
In more recent years, however, management has put less of a
focus on M&A and more of a focus on execution.
"They've amassed all these kinds of brands and businesses and
have operated them very effectively, very efficiently. They've
been more measured in some of their strategic decisions from an
M&A perspective," added Kessler. "I think they've been pretty
shrewd in terms of some of the capital allocation decisions that
they've made. And I think, most importantly, perhaps,
operationally the company seems to continue to execute on a
One way IAC is different from other large Internet companies
is that it tends to operate all the businesses autonomously.
Its stock, after hitting a high last October, went through a
soft patch, but has been recovering since. The reason for the
softness? The market's perception of the impact of changes
toGoogle 's (
)advertising policies on IAC's Ask.com.
"They (Ask.com) weren't one of these bad actors that Google is
trying to police up," said Brian Fitzgerald, an analyst at
Jefferies & Co. "There were some of these other guys that had
to make these changes."
"The Street got a little overly concerned with the Google
changes. This company has had a 10-year relationship with Google.
That is not a business relationship that is going to go sour
The search engine Ask.com generates 5% of all global online
search queries. The search segment accounts for more than half of
IAC's total revenue. It grew 41% in 2012, outpacing the
industry's search growth rate of 15%. Nearly all of that
segment's revenue comes from Ask.com and more than 90% of it
comes from Google display ads that appear on Ask.com.
Another way IAC has been trying to be more proactive about its
business is by reshaping its earnings calls, noted Fitzgerald. It
was a very hands-off call, but now "they've made a market change
to adjust how they interface with the Street. They started
putting out detailed notes and prepared remarks. So, they really
want to make sure that their message is getting articulated to
He expects the search segment to grow at 19% in 2013,
generating revenues of $1.7 billion. IAC also acquired About.com
in 2012 and should see positive synergies from that
"With the About.com acquisition, what they're doing is they're
starting to layer in some of their own content in the results.
So, it's not 100% Google data," said Fitzgerald. "They've always
had third-party information as part of their service. And prior
to owning About.com, they had to pay for that."
Matching and personals take up about 24% of IAC's total
revenue and are expected to grow 12% this year. This area
includes dating sites Match.com, Chemistry.com, OkCupid.com,
OurTime.com and the European network of dating sites Meetic, as
well as many others.
"Match.com is subscription-based. Some of the acquisitions
they've done over the course of the years, such as Meetic, were
more advertising-centric. So what they're doing is, they're
trying to up-sell guys who are just going to these Meetic sites,
which are advertising-driven, into a subscription-based product,"
In addition to having a special collection of brands and
businesses as well as using a proactive approach to operations
and investments, the management team is considered very solid by
"They do a lot of things the way they're supposed to be
doing," said Kessler.
IAC has had a very shareholder-friendly policy. They recently
increased their dividend, providing a yield of 2%, a figure
unheard of in the Internet industry. Since 2008, they've
repurchased stock or paid dividends in the amount of more than $2
billion. The company recently approved an additional repurchase
plan of 10 million shares.
In the past, IAC also spun off several companies,
),Ticketmaster (TKTM) andTree.com (
). Kessler says the spinoffs were never because of problematic
businesses, but rather as a way to reduce complexity or unlock
"They are very active. They constantly are monitoring their
existing businesses, potential opportunities and taking action to
improve what they have. And I think that's somewhat different
than a lot of other companies, where it seems like there's a huge
level of time horizon and patience, and, sometimes I argue,
wrongfully so," he added.