IAC/InterActiveCorp (IAC) satisfies inquisitive minds who want to use the Web to explore local hot spots, meet the right partner, find a contractor, and maybe even host a party or two. The Internet conglomerate owns more than 50 brands, including search engine Ask.com, local guide Citysearch (part of advertising network CityGrid Media), dating site Match.com, and home service provider network ServiceMagic. Other IAC holdings include Shoebuy.com and a majority stake in Connected Ventures, the parent company of racy college entertainment site CollegeHumor.com. It also operates current affairs Web magazine Daily Beast and publishes Newsweek magazine through its 50%-owned The Newsweek/Daily Beast Company.
As the economy began to show signs of recovery in 2010, the company reported better than expected financial results. That year IAC posted growth in revenues across all of its business segments; overall, revenues increased by more than $290 million from the prior year, reflecting a 22% jump from 2009. Gains at the company's Search, Match, and ServiceMagic businesses led to an increase in operating income of more than $94 million in 2010, up from a loss of $980 million in 2009.
These positive earnings coincide with a year of major activity and revamp at the company. In 2010 IAC's biggest money-maker, its Search segment, relaunched its Ask.com (formerly Ask Jeeves) site. The site re-positioned itself as a resource for posing and answering questions rather than just delivering links. The new site draws on several sources to answer questions, including search technology, an online Q&A database, and Ask.com community members. The change comes as Ask.com was in need of a new strategic direction -- as a result of a weak advertising market and a down economy, IAC was forced to write down some $900 million on the value of Ask.com. The site still provides search results, however, and has an advertising partnership with Google -- worth an estimated $3.5 billion -- that expires in 2012.
Online local city guide Citysearch -- another component of IAC's Search segment -- also underwent a reorganization in 2010, when Citysearch became CityGrid Media. The new name reflects that business's evolution to a local advertising and content network that also houses Urbanspoon (online restaurant guide acquired in 2009) and Insider Pages (consumer reviews of local businesses, purchased in 2007). CityGrid Media still operates Citysearch as its flagship website that covers approximately 18 million business listings with information and reviews. The CityGrid network is designed to help advertisers better target consumers of local communities. All total, the network includes more than 800,000 advertisers who reach some 140 million unique users across more than 150 Web and mobile partners.
In addition to new activity at its Search operations, the company has been focused on building up Match.com, its second largest segment in terms of revenue. In 2011 it acquired OKCupid, an advertising-based service that targets a younger generation of online daters, for $50 million. Match earns most of its revenues from subscription fees, and it made the deal to diversify into advertising. The previous year IAC formed a joint venture between Match.com and European online dating company Meetic to provide personals services in certain countries in Latin America. The two companies entered a relationship in 2009, when Match.com sold the European operations of Match.com to Meetic in exchange for a 27% interest in Meetic and €5 million (or about $6.7 million).
In a key development for IAC that turned heads in the media world, in 2011 the company's online publication the Daily Beast joined with the venerable Newsweek to form Newsweek/Daily Beast, a joint venture company. The two editorial staffs combined under the editorship of Daily Beast founder Tina Brown. Newsweek had been losing money, and in 2010 Sidney Harman (founder of Harman International Industries) purchased the magazine from The Washington Post Company. Harman made the deal to help revitalize the print title, which had been faltering as it tries to remain relevant in the Internet era; he served as executive chairman of Newsweek/Daily Beast until his death in 2011. IAC saw the deal as an opportunity to add a glossy print magazine to its media holdings in order to have multiple platforms to offer advertisers. IAC chairman Barry Diller is also using the deal to play a role in helping shape the future of journalism in the digital age.
IAC previously made acquisitions and disposals in other areas of the business as well. To expand its ServiceMagic business, IAC acquired MarketHardware, an online provider of marketing solutions for home services businesses, in 2009. Also that year the company sold off non-essential holdings in its Emerging Business segment, which was subsequently renamed Media & Other. (The segment includes all assets not related to Search, Match, and ServiceMagic.) As part of this plan, in 2009 IAC sold campground reservation firm ReserveAmerica to community sports site operator The Active Network. Under the terms of the sale, IAC received a minority stake in The Active Network.
In late 2010 the company experienced a shift in ownership when it bought out its largest shareholder, John Malone's Liberty Media, for $220 million in cash and its Evite and Gifts.com assets, which transferred to Liberty Interactive. (Liberty Media had previously owned some 60% of IAC.) Liberty Media's sale of IAC represents an end to the contentious 17-year business relationship between Malone and Diller. Concurrent with the deal, Diller stepped down as IAC's CEO. He controls about 34% of the votes for IAC. Diller remains chairman, and former Match.com CEO Greg Blatt was appointed head of IAC.
Formerly a jumble of disparate assets that included cable-TV networks, travel services, and mortgage lending, IAC slimmed down considerably to focus on the online search and content market in 2008, when Diller spun off HSN, Ticketmaster, Tree.com, and Interval Leisure Group. The spinoff undid years of acquisitions by IAC that positioned it as a big player in e-commerce, but also created a complex corporate structure that confused investors.