IAC: Now Getting Back To Business

This story was written by Joseph Weisenthal.
Congrats on the court win, now about that share price. During the trial, Liberty Media (NSDQ: LINTA) lawyer Kevin Abrams badgered Barry Diller about the company's poor performance, but the judge didn't buy it as a central issue to the case. It is central for investors though, as IAC (NSDQ: IACI) trades about 50 percent off its 52-week highs. Will the spin actually help anything? Sure, you can talk about the conglomerate discount, and how the breakup might help alleviate that that. But the challenges facing units like LendingTree and TicketMaster, not to mention the remaining IAC business will persist together or apart. Giving each one their own management team and own stock will only help so much.

While Diller has indicated that LendingTree will likely require some sort of outside investment, Jessica Vascellaro at the WSJ reported that there have been talks regarding a possible stake in Ticketmaster from Elevation Partners, which includes U2's Bono. This comes at the same time as news of U2's major deal with Ticketmaster rival LiveNation.

It's also worth pointing out, because you wouldn't know it from several of Vascellaro's pieces on this story, that it was her original report of interviews with John Malone and Liberty Media CEO Greg Maffei last October that help catalyze the acrimony between the pair. It was frequently referred to as a key moment in the timeline during the trial and was mentioned in Friday's ruling: "Maffei and the reporter flew on a company plane from New York to Liberty's headquarters in Denver for the interview. Although the parties dispute what Maffei and Malone told the reporter, the end result is indisputable the October 27 issue of the Journal carried a story announcing Diller and Malone's 'divorce.'"

Meanwhile, Lehman Analyst Doug Anmuth, in a new report, argues that the court result is good for IAC shareholders because it removes a major management distraction and because it increases the likelihood of an asset swap between IAC and Liberty. The basic thinking: Now that Liberty stands to see have its influence over the various units limited, it might be willing to do some sort of asset swap on terms more favorable to IAC, just to extricate itself from the whole mess. Another benefit to the single-tier spin, argues Anmuth, is that it should be easier to get outside investors, or even buyers, for these assets (such as the aforementioned deal with Elevation). In a scenario where Liberty dominated the boards of these companies, such arrangements would have been harder to come by.


By Joseph Weisenthal
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