Deep Dive: Interactive Corp (IAC)
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What do they do? IAC is a holding company that owns interests in media and internet businesses. These include Vimeo, Angi’s Homeservices, Care.com, DotDash, Turo, and more.
History? IAC was started as Silver King Broadcasting Company in 1986, and Barry Diller ended up buying them and renaming them to IAC. From 1997 to 2005 the company bought Ticketmaster, Hotels.com, Expedia, Match.com, and other internet businesses. They have a history of spinning-off successful investments like with the recent Match Group IPO.
Industry? It is a holding company so no real industry. We discuss Vimeo’s market and Angi’s market during the show though.
Management? Barry Diller is the chairman and owns 6.6% of shares outstanding. Joey Levin is the CEO (just signed a 10-year deal) and owns 3.9% of shares outstanding. He has been with the company since 2003.
Valuation? Enterprise value is around $15 billion. Vimeo stake is estimated to be worth $5.5 billion, Angi’s stake at around $5.4 billion, MGM stake at $1.8 billion, giving the core businesses a $2-$3 billion value. Again it is important to take a sum-of-the-parts approach here.
Earnings? Q3 sales of $788 million, up 12%, and cash flow positive. Hard to look at earnings though when it is a holding company.
Balance Sheet? $3.8 billion in cash, $1.8 billion in goodwill, $1 billion in debt on Angi’s balance sheet.
Potential Competitive Advantages? We said liquidity, holding company structure, and track record.
Potential Future Growth Opportunities? We discussed Turo, Vimeo, and MGM.
Highlights? Track record and management.
Lowlights? They put a lot of debt on spin-offs, and it is tough to grasp the true value of all their businesses. Hard to find lowlights though.