Backchannelmedia

Independent, The; London (UK)

By KATHERINE GRIFFITHS

It might be surprising to learn that Barry Diller, the famously fierce Hollywood mogul turned internet executive, does not get a thrill from the cut and thrust of competition.

'I really don't like competition, though many of my colleagues do. It doesn't interest me,' says Mr Diller, one of America's richest men and whose career has included heading ABC, running Paramount Pictures and turning Fox into a viable fourth television network in the US for its owner Rupert Murdoch.

No one might find 63-year-old Mr Diller's serene stance more unexpected than Michael Eisner, Disney's larger-than-life former chief executive who stepped down at the beginning of this month. According to Mr Eisner, he and Mr Diller were like 'two little tigers' when they worked together at ABC's television network while in their 20s, where Mr Diller was more senior of the two.

The 40 years since then have included several spectacular bust- ups and periods marked by hostility between the two. However, particularly recently, relations seem to have become more cordial and Mr Eisner chose Mr Diller along with John Travolta as one of his interviewees when he appeared as a guest host last week on The Charlie Rose Show, a popular television chat show.

'Michael's just more competitive than I am. I made my way and he made his. We've both, as they say, done all right,' is Mr Diller's pronouncement.

At a time when his old friend and foe is bowing out of full-time power- broking, Mr Diller could not be more bust. Last month he split his company, IAC/InterActive, into two, making its internet travel site, Expedia, into a separate entity.

Mr Diller is now the chairman of Expedia, the world's largest online- travel business, and of the other company, which has retained the IAC name. Its holdings range from Ticketmaster and the Home Shopping Network on television to the latest major acquisition, Ask Jeeves, which has recently been rebranded Ask.com.

Mr Diller, who is tall and lean and hails from Beverly Hills, where he started work in the postroom of the famous Hollywood talent agency William Morris, notes wryly: 'My career is getting to be endless.'

He seems to relish the challenges presented by the fact that he deserted the world of old media nine years ago " reportedly after tensions at Fox with Mr Murdoch " to create through acquisitions an internet and direct- retailing conglomerate.

Those challenges include getting investors to understand IAC's complex business model. 'We are very young at this. We're not a Procter & Gamble " 100 years old " or a General Motors " 125 years old, or whatever it is. But we are multi-business businesses like they are. To think that all of our businesses, all in these new areas, are going to appear to anyone looking in as relating to each other in a long-term strategic way is just foolishness.'

Indeed, investors are wary of IAC, accusing Mr Diller of using the multiple deals he has done since he bought the Home Shopping Network in the mid 1990s to create a 'hodgepodge' or a 'smorgasbord' of holdings which do not hang together in a coherent fashion.

Shares in IAC and Expedia have fallen since the businesses were split, despite the fact that the move was intended to be a way to become more transparent and investor-friendly.

Mr Diller says he has much more equanimity about Wall Street's view than he used to. 'The problem is that in this mostly silly men's club, you are often too wired, and your emotions and self- worth are too tied to the short-term markets. The real issue is, are you building something of real long-term value? If so, everything else will take care of itself.'

At IAC, what is being built is a business which has lots of different constituents " financial services and house buying were recently added to the tickets, home shopping and internet search business " but which has all of its businesses directly facing consumers.

The first priority with Ask is to try to boost its position from fifth in the internet search market. Mr Diller says that is already happening, with queries growing by 25 per cent a month in the US.

There is a strong possibility that the next aim for Ask might be to use it to link all of IAC's customer-facing businesses up. Creating a so- called internet portal, which brings together online search, with 'content', such as shopping, entertainment and news, is already being pursued with gusto by others such as America Online (AOL), owned by Time Warner, because of the lucrative advertising revenues that can be earned.

Given Mr Diller's background in the television and movie business " where he oversaw hits including Cheers and pioneered ideas such as the movie made specially for television " it seems particularly striking that IAC does not own a creative content provider. That is likely to change, because of the technology changes which make it possible for consumers to download films over a broadband connection to the internet at much faster rates than before.

'Me and my colleagues have expertise in audio-visual forms of content and I think we'll enter it. I don't know when and I don't know how, but it is getting to look interesting again.'

Just as Time Warner " whose traditional media holdings include CNN, Time magazine and the television network HBO " is muscling in on IAC's internet space, so is another traditional media giant: News Corporation. Mr Diller who is reluctant to be drawn on his views of the list of media moguls that he is on first-name terms with, and who come to the annual picnic he hosts with his fashion designer wife Diane von Furstenberg, is fulsome in his praise of Mr Murdoch, despite their past friction. 'Rupert Murdoch is the only truly great international entrepreneur functioning in the media business. He makes his bets and he is right more often than he is wrong.'

Of the 74-year-old businessman's decision to make it a priority to buy internet businesses, including IGN " which is behind various gaming and entertainment sites, and MySpace, which allows users to talk to each other online " Mr Diller says: 'He is willing to take the risk of opportunity. The businesses he is buying will either be worth more over time or they will be worth vastly less. If I were taking a bet, I'd always bet on Rupert because he is that good.'

In fact, what Mr Murdoch, AOL and Google and a host of others are up to is competing with Mr Diller for control of the highly lucrative and fast-growing area on the internet that centres on merging advertising, internet search with content. Mr Diller might be able to claim he got there first in terms of seeing the opportunities to create an internet conglomerate, but he now runs the risk of being outfoxed by rivals.

Does this make his competitive hackles rise? He concedes that 'being competed against keeps one sharper and more willing to innovate.' But fundamentally, Mr Diller maintains, his reaction to other sharp operators who are turning their attention, his business plan is quite zen-like. 'It just makes me smile,' he says.

From talent-spotting to teleshopping

Title: Chief executive and chairman of IAC InterActive, and chairman of Expedia

Age: 63

Pay: Mr Diller took home pounds 81m last year, mainly by cashing in stock options

Career: Started in postroom at William Morris Agency. Hired by ABC in 1966 and was promoted to head of films and programme development. Moved to Paramount Pictures and served as its chairman and chief executive for 10 years, starting in 1972. Mr Diller was recruited by Fox in 1984 and quit in 1992. He then purchased a $25m (pounds 14m) stake in the QVC teleshopping network, becoming its chairman. He resigned in 1995 before building up what is now called IAC through an initial investment in the Home Shopping Network.