There's one consistent quality in IAC/InterActiveCorp iaci CEO Barry Diller's long career, one that has made him a force in television, movies, home shopping and the Internet. He loves to challenge conventional wisdom about business — and himself.
Consider Diller's most recent and controversial pivot: After years of opposing media mergers, he's earned the wrath of pop icon Bruce Springsteen and others with an effort to create a concert colossus.
Diller, 67, wants to join the dominant ticketing and music-management company — Ticketmaster, where he's chairman — with Live Nation, the leading owner of arenas, which also now manages performers and sells tickets. The outcome is in the hands of antitrust officials.
But the effort is characteristic of a CEO who has become a celebrity in his own right after shaking up entertainment programming at ABC, reviving Paramount with blockbuster movies including Saturday Night Fever and Raiders of the Lost Ark, creating Fox Broadcasting — and then ditching Hollywood to become a retail and digital entrepreneur.
His online empire now includes such disparate properties as Citysearch, Ask.com, Expedia, The Daily Beast, CollegeHumor, Match.com and Evite. With so many properties that depend on consumer spending and advertising, the gloomy economy poses the toughest challenge yet to Diller's programming and dealmaking skills.
He shared his views about prospects for business, his companies, the Internet and traditional media with USA TODAY's David Lieberman at the 10th USA TODAY CEO Forum, in conjunction with the Olin School of Business at Washington University in St. Louis.
The interview took place in front of an audience. Edited for length and clarity, here are Diller's thoughts on:
Q: You're stockpiling cash. Are you waiting for prices to drop more before you buy something?
A: I'd like to spend it intelligently. You can't have it get hot in your pocket. Unfortunately, it's really shocking to me, but I cannot find anything that is worthwhile buying today. I hope to God I do.
Q: What kind of things are you looking at?
A: We've been in the consumer part of the Internet for a long time. But I can't find anything in the Internet area. So, what you have to do when that happens is redefine what (your) area is so you can keep growing.
Q: How about AOL?
A: Oh, that's a good question. We talk with AOL a lot, and there's a lot of common relationships there. We're, I think, the seventh- or eighth-largest Internet network, and I think AOL is one or two slots behind us. There's a really good idea for a combination there, but it's complicated to do. It's inside Time Warner, which wants to get rid of it. It's hard to engineer because of its legacy. But, industrially, it makes sense.
A: I'm sure there are some commercial applications for Twitter, but they don't really interest me. I mean, 140 characters? I am really not interested in Ashton Kutcher's daily walks. Not for me.
A: Facebook's the real deal. Nobody can buy Facebook now. Everybody has taken an angle at it. But Facebook may be the place that organizes everybody's personal information. It's got a very good chance of being that.
Q: Back in 1994 you tried to buy Paramount. With the benefit of hindsight, are you glad you lost?
A: We lost Paramount in the sense that we didn't make the last bid. And I think it was a big mistake. I wish we owned Paramount.
A: I would have loved to have played in (the digital media revolution) in television and motion pictures. I think it would have been interesting, and I think we would have done OK with that asset.
I didn't do it because I was chicken. I had just come from being a corporatist, and I clutched at the last minute and I shouldn't have, and I know what it was due to. It was due to lack of experience. And it was a good lesson for me because it taught me not to do that.
Q: You said a few years ago that you were concerned the cable industry would take over broadband. Is that still a concern?
A: I very much believe in net neutrality. We have all lived through a world which has been dominated by distribution scarcity. There were only so many cable programs you could have because (cable operators) conned everybody into thinking that (their lines) could only carry so much. But, they were interested in it being scarce. They could say (to programmers): If you want to get on, give us half your business. It was a great scam while it lasted, this idea of scarcity.
Well, the Internet is this miracle. It is an absolutely extraordinary idea that you can press a send button, and you are publishing to the world.
And what cable companies want and telephone companies want, of course, is to say: No, wait a minute. If you're going to publish a book, you publish to us, and then we transmit it on from there. And, therefore, we want the Internet not to be neutral. We have invested all this money, and this is how we'll get our return. I think that's a horrendous idea.
Q: Time Warner Cable's been talking about usage-based pricing for broadband.
A: Well, I'm not against usage. You pay for electricity only by how much you use. I don't think there's anything wrong with paying, so long as it's a common carrier — meaning there has to be regulated pricing like there is for utilities, which is not going to happen.
So, I think the idea of charging for usage is a good idea. The problem is: If you've got little competition there, then the prices can just be, excuse me, ridiculous.
Print and TV
Q: What's the future of print media in the Internet age?
A: If you've got ink on your hands, which means that you're a print person, you're finished. These news-gathering organizations depended upon being the only place in town. And everybody has advertising now. So, it's a very tough transition.
You're going to pay for information that you want. And you're going to pay directly, which means there's going to be either micropayments or subscriptions. Advertising in the new world order can't support much of anything. Therefore, you're going to have hybrid business models that are going to have subscription revenues and other types of revenues.
We're going to have professional news-gathering operations. I do not think we're going to be a world where we're going to have citizen reporters doing all of the work. I think that it's going to be a really tough period, it will get worse, and then I think it will come out the other end by being supported by other revenue streams.
Q: How about TV's big-budget shows?
A: No. Forty years ago you had three channels. Then, with cable, you had more channels. But we're just getting to the point where there's enough bandwidth that we're going to have unlimited opportunity to get whatever we want.
Because there is no longer scarcity, an hour-long drama is not going to exist at the multimillion-dollar production level and not in the current distribution scheme. For everybody in that world, you talk about creative destruction. General entertainment is absolutely going to change for all of us.
Q: Live Nation is the country's largest owner of arenas. Ticketmaster is the largest ticketing company and has deals with several stars. Why shouldn't we be nervous about seeing them get together?
A: Well, you can be nervous all you wish. It sounds awfully arrogant. It's not meant that way. The thing is: These companies don't compete with each other directly. We don't own venues as Live Nation does. And Live Nation just entered the ticketing business but they don't compete with us at this point. So, it's vertical, and there's nothing legally wrong with vertical.
The issue is: Will consumers pay more? No. I actually think that what the combination will do will allow us to develop what was really lacking. The big players are getting rather old. The Rolling Stones are out there now. What we don't have is a great development process for new talent.
The recorded music business now is, in a sense, the loss leader for live entertainment. And the truth is that they should have symbiotic relationships, and I think we can bring that. But it's under review at the Justice Department and we'll know whenever they get around to dealing with this.
Q: Fleetwood Mac will be playing in St. Louis in a couple weeks. You can get a midpriced ticket for about $77, then there's a convenience charge of $9.70, a building facility charge of $2.50, and for the privilege of printing out my own ticket at home, I've got to pay you $2.50.
A: I would tell you what a great privilege it is for you to be able to do that and how much infrastructure we had to create and desks we had to make in order for you to do that. But here's the thing: Ticketmaster is the definition of an unloved company. Many more people are denied tickets than we are able to give them because there are only so many seats in the house.
The problem with the ticketing business is: It's the essence of non-transparency. And the reason is that everybody has an ax to grind. Artists do not want consumers to know that they have a take of different parts of the ticketing package. People who own venues want to put in service charges. So I think there's going to be legislation which is going to force transparency, and I think that would be great for everybody.
Video on the web
Q: You've been very excited about video on the Web. But no one's making money at it yet.
A: That's definitely true. We have a site called CollegeHumor.com some of you have probably seen. A few years ago it started to produce videos, and over a relatively short period they built up this little group, about 30 people, and they now make about eight videos a week.
And they're extremely successful in the sense that a lot of people view them. They get spikes in the millions of hits, and the quality is very good. And it's not expensive to produce a three- to five-minute video. Now people are getting used to the fact that they're going to have some commercial interruption of videos.
Q: So what's the business opportunity?
A: Go back almost 100 years to the beginning of the motion picture business. They began with "one-reelers." A lot of them were serials. They were at that time anywhere from seven to 10 minutes. Cecil B. DeMille, one of the great movie makers of all time, was making 30 of these a year.
So, I see this little group who are using modern techniques. They're going to graduate as the form evolves just like the movie business did, from two-reelers to 10-reelers. In other words, it will expand as the Internet and bandwidth is able to deliver video that will not just be seen on small little form factors, but on screens in your house or screens of any size.
Q: The credit markets seem to be easing, but employment looks pretty grim. Have we seen a bottom yet or, as Paul Krugman says, is it just getting worse more slowly?
A: It seems impossible that you could say that we actually know the duration or the depth (of the recession), because there are really three areas that most impact us.
One is unemployment, which is undoubtedly going to rise from where it is now. We have not seen what will happen with commercial real estate, because commercial real estate is primarily based upon huge amounts of leverage.
And the other area we haven't seen is corporate debt, which is also based upon huge amounts of leverage, and those two haven't yet washed through this.
Q: So, what takes us out? Can you count on consumer spending coming back, or would it likely be some other engine?
A: Well, for sure we're going to count on government spending coming back. I mean, they're throwing everything that can be imagined at this. Everything has a very short life span now; we may have this very sharp, quick resolution.
Q: A couple of years ago you were the highest-paid executive in the country. Do you think that, in retrospect, you went too far?
A: It's impossible to justify stuff like that. But here's what happened. In 1992 I left Fox and I joined a company, and that company at the time was losing $70 million. I bought stock with my own money and, because this company was on fumes, I was given an option to buy shares in that company at a price at that time which was very low. That option lasted 10 years, and the company prospered.
And, on the last day of that 10-year period, I exercised that option. And, not that I want gold stars on my head, but I paid the taxes and I hold every share of stock that I got for that. I didn't sell any. Now, that was a gain for me over a 10-year period. However, in the reporting of this, it is reported as if it's in one year.
Q: There's a middle-ground proposal out there called say-on-pay. Shareholders get to express an opinion on compensation. It's not binding. What do you think?
A: I think it's fine. There's nothing wrong with people expressing their opinion. But I think that there's so much misunderstanding here.
I understand the honorable issue of saying: This is too much. And I certainly understand the excess, and I absolutely understand paying people for bad performance is kind of lunatic, and that will stop regardless of a single thing.
Most broad-based shareholder proposals don't go forward because they're outvoted and unwise. That's just the nature of it.