Barry Diller: Recession Is Good News For Expedia (IACI)

Key points from Barry Diller’s appearance at Citi’s Entertainment, Media, Telco Conference: Barry argues that many of IAC’s (soon to be broken-up) assets will do well in a recession: Expedia, for instance, should enjoy leverage from hotels desperate to fill rooms. Ticketmaster will weather loss of major client Live Nation. Lending Tree will bounce back when mortgages do. Ask? Not doing so well, Barry admits.

Barry explaining double-digit growth projections (top and bottom line) for HSN. “What we did is we changed the management, and for the first time brought in a world class mechandiser, and she changed the DNA of the operation.” That hurt ops “cratered”  in near-term as new team learned business. But in last couple months, “there’s no question” that things on upswing. Or maybe there is – it could be a “false wind,” Barry allows.

Recession/slowdown? Are some of Barry’s businesses (HSN, Expedia, etc?) “counter-cyclical”? Yes, he says. Expedia had huge growth after 9/11. Why? Because online travel agents had huge leverage when hotels, etc were desperate to fill vacancies, so commissions increased, margins improved. So that could happen again.

Ticketmaster: LiveNation’s (LYV) leaving. What are you going to do? “Ticketmaster needs to do what it has been doing. I have no fear that we will make up the volume in the next few years that was LiveNation.” The issue isn’t core business. We’re more excited about new lines, like secondary ticketing business (see: eBay’s StubHub). Way too many tickets unsold, and that’s because there’s no variable pricing, yield management, etc. We think that getting ourselves very very deep in secondary market will help primary market and “overwhelm” it. “At some point it will all be variable pricing.” Business will get verticalized – like LiveNation getting into ticketing, we’ll get into promotion via alliances, etc. “Live entertainment will absolutely grow” — apparently Barry hasn’t checked recent Billboard concert results.

Ask: We’ve proved that our little group of people can out-innovate our big competitors. Product side is “better than I could have ever hoped for.”  But the problem is the “entrenched nature of  legacy habits” that have people using Google. “We certainly have not bitten an inch out of the hide of Google…I’ve been daunted by the progress of that.”  At least Ask is profitable. “But the challenge of the year…is to get people to try it, experiment with it, and then adopt it.” Hope this doesn’t mean more billboards…

New formats: When does mobile search become material? “Not for a while.” Video advertising? “Near term, without any doubt, is video. We’re a few years down the road.” Inevitable. Won’t likely look like tv ads, but you’re going to see “big big amounts of advertising” move over the web.

LendingTree: They’ve 1800 or so out of 2200 people. They’ve gotten down to the absolute minimum while keeping the value of the brands. That’s why they haven’t cut all marketing, and they won’t. Still controls 40% of online mortgage market (which itself not so big).  Battening down the hatches. Will be very conservative over next few years, but it will emerge. “It’s a beaten sector. It has to recover. Mortgages have to come back.” It is still a huge lead generator.

Audience Q&A:  Another video question. What role will search play in booming market? A big role. In next year or two, will see really good development in really good search tools.

Liberty/HSN: Odds on John Malone buying HSN? Barry slightly testy, says you should ask Liberty’s Greg Maffei, “who tends to make statements about Liberty and IAC”. Then rambles on without any specifics. “I’m hopeful but nothing’s happened yet.”

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