Media mogul Barry Diller takes on the publishing world
Barry Diller, chairman of InterActiveCorp, discusses his unconventional new business venture.
Barry Diller may not be a household name, but his company IAC/InterActiveCorp owns a piece of some of the hottest companies on the web. IAC's holdings include dating sites like Match.com and OKCupid, online reference books like Dictionary.com and Reference.com, you name it. IAC has snapped up more than 150 websites and brands and it's making money doing it. Last year's gross profits hit $1.3 billion.
But Barry Diller is not your typical tech guru. He's better known for his Hollywood successes -- at the helm of Paramount Pictures, Vivendi Universal and 20th Century Fox.
Diller is a classic media mogul who’s figured out a way to make money on the web. But can he find a way to make publishing profitable? Diller’s just invested $20 million in a publishing company he’s starting with producer Scott Rudin. It's called Brightline, and it will release e-books to start, and printed books down the road.
So why now? "In the next 5, 10 years at the most, [publishing] is going to go through more transition than it's had in the last 100 years," says Diller. "I've always been interested in businesses in transition and if ever there was a business in transition, it's publishing."
So how did someone with a background in traditional media find his way to the Internet? Diller admits he was ready to try something different when in 1992 -- having spent over 20 years as a senior executive in the movie business and the television businesses -- he felt "there was no longer a great thrill in opening a movie."
Diller says he took some time off and found himself at the studios of the home-shopping network QVC. "Screens for me have been about narratives, telling stories. Here's a screen being used to not only tell about goods, but sell them directly to consumers. I had such a big instinct that it was the beginning of change and I was just lucky because three years later along came the Internet."
Recently, Diller has been a vocal critic of media consolidation, even though most of IAC's holdings are media-related. "I call us a conglomerate, absolutely. And yes we are a media company. What I was referring to is that the four major film producers and the four major television production entities are all owned by four people." Diller explains the focus of the four major film studios have changed in recent years. "One of the reasons I think movies kind of stink is because they're now so low on the totem pole of greater corporate interests. It used to be... when I came to Fox, it was almost totally -- it had maybe 20 percent of its revenue came from television -- 80 percent came from film. Out of that, look what Fox has become -- multiple cable networks, international distribution all over the world, controlling interest in BSkyB. In other words, it's a multi-diversified company."
With all of his media success, what advice does Diller have on risk-taking? He acknowledges that taking a risk doesn't always pay off: "You should invest as little as you can to make go what you want to go. But I think you have to have a high tolerance for unproven investment."
And if doesn't work out? Move on! "Sell it, write it off, go on to the next thing," he says.
Kai Ryssdal: If you go online looking for, say, restaurant recommendations you might well go to Urban Spoon. If you're looking for love, you might wind up at Match.com. If you did either of those you'd be going to sites owned by a company called IAC, which is run by a guy named Barry Diller -- who from his earliest days in a mail room in Hollywood has seen the future and made money from it. In movies, at the Fox network before it was a network, online, and now he hopes in publishing. A new company called Brightline -- e-books to start, then printed ones down the road. So today on Conversations from the Corner Office, Barry Diller, the chairman of IAC. Mr. Diller, welcome to the program.
Barry Diller: Thank you.
Ryssdal: What is it about this moment in the publishing business that made you say that it's ripe for an opportunity for you with Brightline?
Diller: I think publishing is going to go -- has been going through -- but in the next 5, 10 years at the most, is going to go through more transition than it's had in the last 100 years. Given that there are six big publishing houses that dominate the market who have been in business, give or take, 100 years. I've always been interested in businesses in transition and if ever there was a business in transition, it's publishing.
Ryssdal: Just to pick up on that, this is kind of a theme for you -- this ability you seem to have to grab things that are disruptive and shake them up. You started up Fox Broadcasting and look at it now.
Diller: I don't know if it's the contrarian a bit, I guess, in me. It's that all of my business life -- every step of it -- has had something that was disurptive about it. Some that worked, some that didn't. When we started Fox Broadcasting and you know this was in a primarily three-network universe. Cable was going, but wasn't really doing original programming. So we said well, we think there should be a fourth alternative. Now there's 78 alternatives. But then, it was -- you must be crazy, that will never work. Look, you balance doing things against risk. It's not that I'm ever particularly confident. What I am is willing to find out, I'm willing to take the chance when I think that the opportunity is juicy enough.
Ryssdal: Was there a moment where you realized that entertainment had to change in order to thrive and make it?
Diller: What happened, personally just to me, was in '92 I had been in the movie business and the television businesses for 20-plus years at senior positions. And I felt I was repeating myself. I felt there was no longer a great thrill in opening a movie. And Fox was landed. Fox was a big, big success by '92 and I thought was does the world tell me? So I drove around for six or eight months and I found myself serendipitously to QVC in western Pennsylvania and said oh my god. Screens for me have been about narratives, telling stories. Here's a screen being used to not only tell about goods, but sell them directly to consumers. I had such a big instinct that it was the beginning of change and I was just lucky because three years later along came the Internet.
Ryssdal: You are on the record as vocally opposing media consolidation. You think it's bad for a bunch of big companies to own everything we hear, see, touch and do. Yet you do seem to be acquiring and owning a whole bunch of what we see, hear and do -- certainly online anyway.
Diller: Not as much as the big media companies, the big conglomerated media companies.
Ryssdal: You don't call yourself a conglomerate and a media company all in one?
Diller: I call us a conglomerate, absolutely. And yes we are a media company. What I was referring to is that the four major film producers and the four major television production entities are all owned by four people. I think there's tremendous diversity now, but I still think the concentration is -- I don't say it's un-American or it's anti-social, I think it's inefficient.
Ryssdal: Purely from a business sense? Doesn't make good business sense?
Diller: Yeah. One of the reasons I think movies kind of stink is because they're now so low on the totem pole of greater corporate interests. It used to be, Paramount was actually totally a movie company. That's all we did was make 15 movies a year. We then expanded it by getting into television and then it got bought and then it got consolidated, etc. When I came to Fox, it was almost totally -- it had maybe 20 percent of its revenue came from television -- 80 percent came from film. Out of that, look what Fox has become -- multiple cable networks, international distribution all over the world, controlling interest in BSkyB. In other words, it's a multi-diversified company.
Ryssdal: Along those lines, do you worry that IAC has its fingers in too many pies, that you can't keep track of everything you're doing?
Diller: No. I think the best testamony to that is, as I say, we've spun off seven companies. Why did we do it? We did it because we thought, for instance, once Expedia reached a sufficient size, we thought it ought to stand on its own. It's better for Expedia and the shareholders that will be solely attracted to that and management that will have no other de-focusing item. But it was because we said that they are better managed this way. I think if we are successful, that will keep happening. And very few companies -- no conglomerate -- is ever going to do that. It would be great for HBO to stand on its own. I think it would be a great public company. I'd love to own that company.
Ryssdal: This is going to sound kind of like a sideways question for a guy who is in business -- as everyone is -- to make a lot of money, but how do you feel about losing money on the way to a successful disruption? I ask because of your investment in The Daily Beast and Newsweek, which is the fading news weekly and all that.
Diller: Oh yes, it is. First of all, I really do believe that it is investment and not losses. You should invest as little as you can to make go what you want to go. But I think you have to have a high tolerance for unproven investment. Now at a certain point, as we've done in some thingS, we've said we've invested $90 million in this and it hasn't worked out for us. Sell it, write it off, go on to the next thing.
Ryssdal: Write it off and don't look back?
Ryssdal: One more thing before I let you go, and I ask because you sound like -- and I imagine that you have to be in your line of work -- an inherently optimistic guy. But are you optimistic about the condition of the American economy?
Diller: Yes. Every indication...
Ryssdal: That was a pretty tentative "yes," Mr. Diller, I gotta tell you.
Diller: Only because I was thinking am I going to get into politics here, but I don't think I will. Other than our really broken political system -- and you could say that's a pretty big ether -- the economy in every sector we deal with and every sector I look at, all signs are good except for the fact that we've got high unemployment. High unemployment is going to be solved because there is more demand and out of that demand is job creation. Without demand, there isn't going to be any, so I think that's all going to come.
Ryssdal: Barry Diller. He is the chairman and senior executive at IAC. Mr. Diller, thank you very much for your time.
Diller: Pleasure. Bye-bye.