Reuters Summit-UPDATE 2-IAC's Diller rebuffed Ask.com suitors

Quotes

   

Wed Dec 2, 2009 11:14pm GMT

(For other news from the Reuters Global Media Summit, click here)

* IAC approached by various parties about selling Ask.com

* Uninterested in selling Ask.com as stand-alone company

* Ongoing talks with AOL about partnerships

* Expects ad spending to be flat to down 5 pct next year

(Adds analyst quote)

By Alexei Oreskovic and Yinka Adegoke

NEW YORK, Dec 2 (Reuters) - IAC/InterActiveCorp (IACI.O) CEO Barry Diller said he has been approached by various parties about purchasing Ask.com, but he is less interested in divesting the search engine as a stand-alone business than consolidating it with another search company.

Overtures about acquiring Ask.com were prompted by comments Diller made during a call with investors in October, when most believed he effectively hung a "for sale" sign on the search engine. [nN27232046]

"The people who called us were on exploration missions, on a stand-alone buy as an asset. That is different than having conversations with other people in the vineyard, in the area of search," he said at the Reuters Global Media Summit in New York on Wednesday.

The veteran media dealmaker said that while Ask.com is not core to IAC's future, he had not meant to suggest in October that the company was keen for an immediate divestiture.

Sweeping changes in the search market in the coming two years, including a proposed partnership between Yahoo Inc (YHOO.O) and Microsoft Corp (MSFT.O), would likely spur more consolidation, he added.

"I think further consolidation in search is necessary given Google's dominance," Diller said.

IAC's Ask.com is the fourth-ranked search engine behind Google Inc (GOOG.O), Yahoo and Microsoft, with a humble 4 percent share of the U.S. search market, according to comScore.

Ask.com uses Google's search advertising platform as its main source of revenue.

"Parting with Ask would hurt IAC's ability to lever the sweetheart revenue share agreement the company has with Google, which is among the best in the industry and not likely to be replicated in the near future," said Colin Gillis, analyst at Brigantine Advisors.

Diller also said he has had ongoing conversations with AOL about partnering in areas including search and local online services, but characterized the discussions as "idle chat." He said IAC was not interested in acquiring AOL.

He dismissed the notion of buying one of the major social networking sites, like Facebook, as a stand-alone company, saying that they have yet to find ways to produce a profit.

"I think Facebook is a great community and certainly going to have value," he said, but added that it was unlikely to emerge as the next Google.

IAC -- a media holding company with more than 50 brands, including local service Citysearch and online dating service Match.com -- finished the third quarter with roughly $1.8 billion of cash and securities on its balance sheet.

Diller said putting the cash to work is "a looming problem," citing a dearth of attractive investment opportunities. "Large asset buying, I think, is dicey right now," he said.

More broadly, Diller sounded a downbeat note on the outlook for advertising, the financial backbone of most media companies.

With "nothing that is pushing advertising" next year, he predicted spending would more likely be flat to down 5 percent, than up 5 percent.

While Diller said Web ad spending should take a greater share of marketing budgets, "overall to be optimistic would be foolish."

A return to significant spending growth, he said, will depend on the economy.

"Our economy right now has got issues all over the place. The two most important pieces of it are unemployment, which is going to probably get worse, and the financing of our commitments."

Shares of IAC dropped 1 percent at $19.22 in the Nasdaq.

(For summit blog: blogs.reuters.com/summits/)

(For more stories from the summit, please click on [nN30131451])

(Reporting by Alexei Oreskovic, Paul Thomasch and Yinka Adegoke; Editing by Matthew Lewis, Tiffany Wu and Richard Chang)

((Reuters Messaging: alexei.oreskovic.reuters.com@reuters.net; + 1 646 223-6000)) Keywords: MEDIA SUMMIT/IAC

(C) Reuters 2009. All rights reserved. Republication or redistribution ofReuters content, including by caching, framing or similar means, is expresslyprohibited without the prior written consent of Reuters. Reuters and the Reuterssphere logo are registered trademarks and trademarks of the Reuters group ofcompanies around the world.nN0216160

Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.