Web 3.0 & IAC (Part 4)

Acquisition Targets

IAC has made a host of acquisitions in the past few years in the Internet space. IAC acquired Ask.com in 2005 for $1.9 billion. Over the past two years it has made some interesting acquisitions including Shoebuy and CollegeHumour. The table below lists all the acquisitions made by IAC between 2001 and 2006.

Note, that IAC holds a substantial stake in Expedia, which also houses Hotel.com and TripAdvisor.com, and is the largest Online Travel company.

This week, IAC, whose portfolio includes Ask.com, Ticketmaster and HSN, the home-shopping network, is seeking a foothold in the multibillion-dollar online-gaming market by taking a majority stake in game developer GarageGames.com to anchor a soon-to-be launched gaming site, InstantAction.

IAC’s highly successful and synergistic positions in CitySearch, TicketMaster, and Match.com could be interesting places to fan
out a more elaborate M&A strategy spanning music, movies, sports, and other “local event” oriented assets.

It is quite surprising that IAC has not made any acquisitions in the online music and movie spaces thus far. In December 2006, Ticketmaster invested $13.3 million in music community site iLike.com. IAC would consider acquiring all of iLike.com at some point to enhance the Ticketmaster family.

46.1% of Internet users get their movie information from Internet sites. IAC could acquire MovieTickets.com, an online movie ticketing company. The site attracted over 5 million visitors in April 2006. IAC could also consider online movie social networking sites like Flixster.com, which attracted 4.5 million visitors in April 2007. Flixster.com raised $2 million in VC funding from LightSpeed Ventures in January 2007. A consolidated position in Online Movies is also perfectly synergistic with Ticketmaster, CitySearch and Match.com.

IAC has recently announced its desire to acquire Paciolan, a ticketing software and services company. Last year, Paciolan solutions were used to sell approximately 120 million tickets, representing more than 25 percent of all live event tickets sold in the U.S. This would be a new growth avenue for Ticketmaster, with a somewhat different business model than the prevalent direct-to-consumer.

In the Online Sports category the Company could consider acquiring sites like Takkle.com or Prep Sports Online, two rapidly growing social networking sites for high school sports. It could also consider fantasy sports site RotoHog or social sports news and opinion site Yardbarker. Overall, having a strong presence in Sports would be synergistic with Ticketmaster and Paciolan’s activities.

Amongst its other gap areas, IAC could be interested in plugging Jobs, Auto, and Photo, as well as, perhaps, social News.

To wet its toes in the Jobs vertical, IAC could consider acquiring a vertical job search engine like Indeed, Jobster and SimplyHired. Indeed is privately held, with institutional investors including The New York Times Company, Allen & Company and Union Square Ventures. Ignition Partners, Trinity Ventures, Mayfield Fund and Reed Elsevier Ventures back Jobster.
SimplyHired, however, is likely to be out of bounds for IAC, since News Corp is a top investor in the company. At any rate, IAC would need to tread carefully, and budget a substantial amount of money and energy if it wants to become a serious player in Jobs, as Vertical Search alone would not be enough. They would need more acquisitions to follow for a comprehensive Web 3.0 strategy to take shape.

In the photo-sharing space Shutterfly is a prime acquisition target. Internet Retailer recently ranked Shutterfly at 93 on the list of America’s 500 largest e-retailers. In 2006 the Company had $123 million in annual online revenues. Shutterfly is a relatively simple acquisition that would position IAC well in the Photo sharing space.

In the online auto space the Company could consider acquiring automotive site 1866cars.com or online automotive community CarGurus.com.

Finally, in Social News, possible acquisition targets are Digg and Reddit. In fact, with either of those, IAC could launch local versions specific to cities or places. Tied with CitySearch, Ask,
and Expedia, Local Social News could be an interesting way to leverage such an acquisition.

Recently, in response to a question regarding acquisitions, Barry Diller said, “We will buy anything that walks”. But as he also said, “valuations have gone nuts”, so timing would dictate much of how Diller’s portfolio comes together.

(To Be Continued)

[Part 1]
[Part 2]
[Part 3]

This segment is part 4 in the series : Web 3.0 & IAC
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