Diller times a split perfectly

NEW YORK - Barry Diller is feeling very lucky right now.

The consummate deal-maker and onetime chief of QVC Inc., of West Chester, split his Internet conglomerate, IAC/InterActiveCorp, into five publicly traded companies in late August, borrowing $2 billion to finance three of them. It was not a moment too soon.

"Some of our advisers said to us, 'Wait a few weeks,' and we said, 'We're not waiting an hour,' " he said in a conference room that afforded him glances at TV monitors where Monday's 778-point drop in the Dow Jones Industrial Average was unfolding.

"And that was wise, because if we had tried to finance the spin transactions now, we'd be frozen. We'd have no chance of doing it. Or it would cost us so much money that you wouldn't justify it."

The spin-offs splintered the amalgamation of Internet and media properties Diller had collected over the years. Now home shopping network HSN Inc., time-share business Interval Leisure Group Inc., ticketing service Ticketmaster, and lending and real estate business Tree.com Inc. are separate from the Internet businesses - such as search engine Ask.com - that have stayed under the IAC umbrella.

This marked a change in direction for Diller, 66, a billionaire who had dived into Internet investments after a Hollywood career that saw him create the Fox broadcasting company and head Paramount Pictures. Diller tried to make IAC something larger than the sum of its parts, but once it became involved in 13 business sectors by Diller's estimation, he acknowledged it was becoming impossible to manage.

"The mistake we made was to think that we could tame this in a relatively short period of time - five years," Diller said.

The experience taught him the perils of too much complexity, he said.

Now, the pared-down IAC consists of Web properties that fall broadly under what Diller refers to as "search" and "local" categories, such as Ask and online city guide Citysearch. There is also a third category Diller calls the "program and emerging-business sector." This includes properties such as entertainment site CollegeHumor and video-sharing site Vimeo.

This latter category might sound rather catchall, as if Diller is leaving himself a way to create another jumble as multifaceted as the old IAC. But Diller said it wouldn't happen. He vowed that the "opportunism" that previously drove IAC to gobble up varied Web companies would never again be 90 percent of what IAC does. Now it's about 10 percent, he said, and it will shrink to about 5 percent.

"We're never going to close the door for opportunity that comes literally from wherever, hits us like a pie in the face, or by our own construction of a pie," he said. "But . . . it is now no longer the company. It could happen, but we're not organizing ourselves for it and I like that."

Diller still wants to add to the pared-down IAC, though. In October, the company is planning to launch the Daily Beast, a news-aggregating site with editorial content. IAC's partner on the project is Tina Brown, former editor of the New Yorker.

And Diller said the company is "extremely interested" in bringing in Web sites with structured content that can add to IAC's search and local content stables.

Don't expect him to launch the next Facebook, though. Diller isn't particularly interested in social-networking sites as a business opportunity. Such Web sites - including leaders Facebook and MySpace - have had trouble turning their vast audiences into huge streams of advertising revenue, and most of IAC's revenue comes from sponsored listings and other online ads on its Web sites.

With the current economic crisis, "nobody at our companies [is] thinking of making deals right now," Diller said.

But that doesn't mean Diller is entirely down. Back to Diller's new enemy, complexity: He said he hoped Wall Street's crisis would end the idea that risk could be washed away by increasingly complex financial transactions "that most people will tell you are not understood by the people selling them, and certainly are not understood by the people buying them."

"We're living in interesting times," he said. "But on the whole, so long as damage can be relatively contained, this is a fantastic thing that's happening."