Mr. Speaker, I submit the following article for the Record. [From the Washington Post, June 5, 2003] The Binge Isn't Over For Diller (By Leslie Walker) Barry Diller may prove Woody Allen was right when he said 80 percent of success is…
Mr. Speaker, I submit the following article for the Record.
[From the Washington Post, June 5, 2003]
The Binge Isn't Over For Diller
(By Leslie Walker)
Barry Diller may prove Woody Allen was right when he said
80 percent of success is showing up.
The onetime Hollywood mogul first got into electronic
commerce more than a decade ago, never left and may end up
being one of its biggest successes. It was 1993, soon after
he entered the television home-shopping business, that he
started extolling the convenience of ``buying underwear in
your underwear.''
When the real electronic commerce wave arrived on personal
computers instead of television, Diller regrouped and started
buying Internet ventures. Yet except for his failed $18
billion bid to buy the Lycos Web portal in 1999, Diller has
remained largely known as an entertainment and media
executive, and his online escapades have attracted little
attention.
Until now. The digerati are finally taking notice of
Diller's online empire since his conglomerate, USA
Interactive (USAI), announced a recent string of takeovers
that are transforming it into one of the Internet's
superpowers. Diller's moves are part of a consolidation wave
gaining speed in the high-tech sector, where start-ups are
still struggling to overcome depressed stock prices and an
oversupply of goods and services.
``We want to be the largest and most profitable e-commerce
company utilizing multiple brands,'' Diller, chief executive
of USAI, declared in an interview this week. (Diller is a
director of The Washington Post Co.)
Diller's recent acquisitions appear to reflect a shift
toward more direct forms of commerce online, where new
commercial matchmakers that could bypass traditional forms of
advertising are catching on.
First, a look at Diller's march across the Web: Since early
last year, USA Interactive has announced it will acquire
LendingTree Inc., which pairs home buyers with lenders and
real estate agents online; travel agent Expedia Inc., which
lets consumers make travel reservations online; British
UDate.com, an online personals site; the outstanding shares
of Hotels.com, an online provider of discount lodging
bookings; and the remaining shares of Ticketmaster, the
electronic ticketing agency in which USAI first took a 50
percent stake back in 1997.
Also in the past year, Diller's company snapped up a string
of offline travel-related companies, including the
Entertainment discount-coupon book, the vacation exchange
network Interval International and Britain's TV Travel Group.
USAI already owned various ``back office'' services, thanks
to acquisitions made a few years ago. In 1999, for example,
it bought one of the world's biggest customer call-center
operations, Precision Response Corp., which also conducts
e-mail marketing campaigns and database services. And, of
course, USAI still owns the Home Shopping Network.
As a result of its takeovers, USA Interactive appears
poised to take in more than $6 billion in revenue this year--
more than Amazon.com, eBay, Yahoo or any other Internet firm
except America Online.
Diller said that his Internet binge is not over. He intends
to buy more Net gems and hinted that LendingTree points in
the direction he is headed. (Think financial services.) Some
analysts worry that the LendingTree deal, a stock swap valued
at roughly $700 million, may be inflated because the home
refinancing wave caused a temporary spurt in its business.
But Diller discounts such talk. ``We couldn't care less what
happens in the very, very, very near term,'' he told analysts
when he announced the deal last month. ``What we care about
is that we've bought the right business in the right
category.''
Still, his company seems to garner more dollars than
respect, perhaps because it resembles a giant Internet puzzle
with the pieces not yet snapped into place. That may explain
why Diller said this week he is flirting with changing the
name of his company again. USAI has gone by at least five
names in the past, none too memorable. The latest moniker
makeover came last year when it sold off its cable TV
channels and replaced ``Networks'' in ``USA Networks'' with
``Interactive'' to focus more on electronic commerce.
Diller said the company's current mission is to act as a
``middleman'' between supply and demand in interactive
commerce, making it more like eBay than retailer Amazon.com.
Like eBay, USAI's companies typically take commissions for
matching buyers and sellers. They hold little or no
inventory, which lowers their costs and potentially boosts
profit margins.
EBay mostly auctions used goods but is aggressively
courting sellers of new merchandise as part of its avowed bid
to become ``the world's marketplace.'' While analysts think
this could make it a head-to-head competitor with USAI,
Diller doesn't see it that way. He said he doubts eBay will
succeed in becoming the world's marketplace: ``They are not
going to make the transition in every category to a fixed-
price model,'' he predicted, ``and will be predominantly
based in peer-to-peer auctions.''
Time will tell how much advantage can be gained from
lumping together different Internet entities or ``multiple
brands'' online. But for starters, there should be savings
from no longer having to run five separate public accounting
operations for LendingTree, Expedia, Hotels.com, Ticketmaster
and USA Interactive, all of which have been trading under
separate stock symbols. After buying a controlling stake in
Expedia from Microsoft Corp. last
summer, USAI declared its intention to buy the outstanding
shares of its key subsidiaries. Expedia and Hotels.com
resisted briefly but yielded this spring.
Soon USAI will introduce loyalty incentive programs for
people using its various e-commerce services. Diller said the
first incarnation, perhaps points-based rewards, will debut
later this year or early next. He added that he has no plans
to create an overarching Internet network with a ``single
sign-on'' for users of USAI sites, such as AOL attempted with
its Web properties and Time Warner did with its original
magazine sites at the ill-fated Pathfinder.com.
``We do not believe in unnatural synergies, and we don't
have one totalitarian brand,'' Diller said. ``We only want to
make relationships where natural law dictates they make
sense.''
AOL and Time Warner, of course, hyped ``synergies'' among
their many brands when the two companies merged three years
ago. Diller said the big lesson he learned from watching that
merger flop was not to shortchange his Internet products but
to keep improving them. ``They took care of everything but
the product itself and paid a terrible price for it,'' Diller
said of AOL.
But USAI will exploit natural connections, he added, such
as cross-linking among its Web sites and pursuing other
cross-marketing opportunities. For instance, Evite.com, a
free invitation service owned by USAI, already rotates banner
ads on its online personals site, Match.com, and the
Entertainment book. You can imagine its Citysearch's online
city guides linking prominently to LendingTree's real estate
service, or Hotels.com offering local event tickets from
Ticketmaster when people book rooms.
Whatever Diller winds up calling his many-headed Internet
beast, it's a good bet it will grow up to be one of the
surviving giants of the dot-corn jungle.