Barry Diller Has Figured Out the Internet

NEW YORK (TheStreet) -- When former movie executive Barry Diller started pulling together what would become IACI (IACI) in the mid-1990s, the knives of the digerati were out for him.

Diller was seen as just another arriviste, an old-media tycoon who would be out of his depth in the wild, wild west of the Internet.

Concerning most of old media, our assumptions were valid.

Back in 1978 I clearly remember, as a Northwestern graduate student, being taken to "Top of the Week," a private club at the top of the Newsweek tower in midtown Manhattan where the school showed off rising graduates. There we dreamt young journalist dreams of sipping gin and tonics after getting off a plane from the Middle East, our scoops having been handed off to typesetting.

Newsweek, it would turn out, would be one of the digital world's most prominent casualties. Diller, who now believes buying it from the Washington Post Co. ( WPO) in 2010 was a mistake, dumped it on International Business Times over the weekend, but it's mainly as a name, not a going concern.

When Newsweek was obtained, the idea was to link it with The Daily Beast, an IAC property headed by former Vanity Fair editor Tina Brown. The sale shows something special about Diller among Internet executives -- his relative dispassion, the fact that he doesn't fall in love with what he owns but will chop-and-change for financial advantage.

The IBT, which is privately held, is run by a 29-year old Frenchman named Etienne Uzac, who works out of Newsweek's old offices in the financial district. The magazine Christianity Today says the man behind Uzac is David Jang, a controversial Korean preacher.

But this story is really about Diller, who has, over the years, amassed quite a nice little digital empire.

Diller and his family owned about 40% of IACI when he stepped down as CEO at the end of 2010, taking out Liberty Media'a ( LBTYA) stake in the process for cash and two Web properties. He called it "family owned" that year in an interview with TheWrap. IACI today has a market cap of $4.16 billion. Diller is also chairman of Expedia ( EXPE).

Diller treats Web properties as standalone businesses he can buy, sell and trade. Among IAC's web properties are About.com, Ask.com, and Vimeo, a video site. Through Citygrid, IAC is a big player in the "local web" with Citysearch and Urbanspoon.

Expedia, the second-leading travel company behind Priceline ( PCLN), also owns such sites as Hotels.com and spun out TripAdvisor ( TRIP) at the end of 2011. TripAdvisor is now worth nearly $11 billion.

There was an assumption, back in the last century, that the New York-based "buy, sell, trade" approach to the Internet would not do, that the Web would, in time, be centralized around big Web companies like Yahoo! ( YHOO). TripAdvisor, IACI and Expedia are now worth, together, about $20 billion, against $29 billion for Yahoo!, although that's mainly due to Yahoo!'s continuing stake in China's Alibaba.

Unlike other big media tycoons, Diller also has his succession in place. Attorney Gregory Blatt runs IACI, Dara Kohsrowshahi runs Expedia and TripAdvisor is back under its founder, Stephen Kaufer. The first two executives served directly under Diller for over a decade.

So, as one of those who pooh-poohed Diller's entry into the Internet industry back in the day, let me just say this simply and humbly: I was wrong. Barry Diller figured out the Internet as well as any 20-something hotshot ever could, and deserves his place in the medium's history.

At the time of publication, the author owned 200 shares of YHOO.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

Dana Blankenhorn has been a business journalist since 1978, and a tech reporter since 1982. His specialty has been getting to the future ahead of the crowd, then leaving before success arrived. That meant covering the Internet in 1985, e-commerce in 1994, the Internet of Things in 2005, open source in 2005 and, since 2010, renewable energy. He has written for every medium from newspapers and magazines to Web sites, from books to blogs. He still seeks tomorrow from his Craftsman home in Atlanta.

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