IAC/InterActiveCorp iacid officially broke itself into five companies Thursday, marking what could be one of the toughest challenges that CEO Barry Diller has faced.
After wowing Wall Street for decades with his dealmaking prowess and advocacy of corporate synergy, the Hollywood and Internet mogul finds himself struggling to regain investor confidence with a collection of mostly Web-based assets grappling with competitors and a weakening market.
"He once had the Diller sizzle," says Alan Gould, media and entertainment analyst at Natixis Bleichroeder. "Now, you've got investors saying 'I don't want to touch anything' " that he runs.
IAC's stock has plummeted 55% the past 18 months; it fell 7 cents to $17.60 Wednesday.
In conjunction with dividing the company, IAC announced a reverse stock split, meaning for every two shares of IAC stock held before the spinoffs, investors will now hold one IAC share. Such moves raise a company's stock price but do not change its overall market value.
IAC also said as part of the division, for every share of IAC common stock held as of Aug. 11, shareholders received one-fifth of a share in home shopping network HSN, time-share business Interval Leisure Group and ticketing service Ticketmaster. They also got one-thirtieth of a share of lending and real estate business Lending Tree, now Tree.com.
HSN, Interval, Ticketmaster and Tree.com were to begin trading Thursday under their own ticker symbols: "hsni" for HSN, "iilg" for Interval, "tktm" for Ticketmaster and "tree" for Tree.com.
The company's remaining Internet properties, including search engine Ask.com, Citysearch, Evite and Match.com, are staying under the IAC name and will trade as "IACID" until Sept. 19 due to Nasdaq rules. After that, IAC will regain its original "IACI" ticker symbol.
Diller will control 60% of IAC's voting shares.
The company hopes investors will warm to the new arrangement.
The new strategy is a pivot for the onetime chief of ABC, Paramount and Fox. He had long said that IAC's properties help each other. To get the benefits of synergy "in the scale and breadth we were after would have taken too long," Chief Financial Officer Thomas McInerney says. "We recalibrated that."
Shareholders will see more information about the separate companies, and their more than 60 brands, than they did when they were all under the same umbrella at IAC.
"No one could make heads or tails of it," says Vogel Capital Management CEO Harold Vogel. "You needed a playbook to figure out whether IAC was making or losing money."
Investors also can invest in operations they like — and avoid the ones they don't. "When you're in a multibusiness construct, it's easy for one underperforming business to drag down the whole," McInerney says. "It becomes a 'yeah, but.' This is an attempt to get rid of the 'yeah, but.' "
Investors started to express their preferences on Aug. 12, when shares in the new units began to trade. Ticketmaster has already dropped 6% to $21.64. One of Ticketmaster's largest customers, concert giant Live Nation, plans to launch its own ticketing service at the end of this year. LendingTree, which has struggled through the housing crunch and credit crisis, is down 14% to $7.42.
And IAC fell 6%. That may be partly due to sales by index funds that invest based on the Standard and Poor's 500 index. Last week, S&P announced it was dropping IAC from the S&P 500, starting today.