New York–In the June 2008 issue of Condé Nast Portfolio, contributing editor Duff McDonald profiles media mogul Barry Diller, who acknowledges that his company IAC/InterActiveCorp is a mess (“The Confessions of Barry Diller,” p. 96). After almost losing it all in an epic battle with partner John Malone, Diller admits his missteps in the candid interview. McDonald reports that after all this time spent selling the world on the idea of an internet conglomerate, Diller now realizes that he was wrong from the start, and is utterly committed to the idea of an anticonglomerate, blowing up IAC and leaving the company’s disparate parts to operate on their own. “We were kidding ourselves if we thought we could pull off an integrated conglomerate that acts like G.E. or P&G in anything less than 10, 20, or 30 years,” says Diller. McDonald writes that since his early success, Diller has seemed less a visionary and more a spastic dealmaker, missing acquisition opportunities like MySpace but holding onto mortgage middleman LendingTree. “Give or take, the return on invested capital has been roughly between 4 and 5 percent over the past several years,” Cowen & Co analyst Jim Friedland says, “which is about the same return you could have received if you’d bought a Treasury bond.” McDonald reports that Diller’s ultimate challenge is to guide IAC to a place where it’s once more earning the respect of the stock market, bringing the reputation of the company and the man in sync.

Also in the June issue:

“The Man Who Saved (or Got Suckered by) Wall Street,” (p. 118). In an exclusive interview, Gary Weiss profiles New York Federal Reserve Bank president and architect of the Bear Stearns deal Tim Geithner. Weiss reports that it was Geithner’s Federal Reserve bank, not the Treasury, that came up with the $29 billion loan that made the deal possible, or, more precisely, acceptable to J.P. Morgan. “Misgivings about the deal are hard to ignore, no matter how catastrophic the consequences of not intervening might have been. It doesn’t help that the deal is teeming with connections [to Geithner] that are sure to raise questions,” Weiss writes, naming Merrill Lynch C.E.O. John Thain, ex-New York Fed chief Gerald Corrigan, and Blackstone Group founder Pete Peterson as members of Geithner’s inner circle. “One intriguing aspect of the Bear bailout—Geithner’s selection of BlackRock to help the Fed value Bear and then manage the $30 billion in collateral—draws attention to these relationships. Merrill owns 49 percent of BlackRock, which was spun off years ago from Peterson’s Blackstone Group.” Weiss reports that while there is curiosity in the financial community about the motives behind the Fed’s involvement in the Bear Stearns deal, Geithner insists that the deal benefited the public and not just the other big banks, who stood to gain from their competitor’s going out of business. “The Fed’s actions in this financial crisis will benefit Main Street more than they benefit Wall Street,” Geithner asserts. Weiss notes that Geithner is already anticipating that regulatory shifts will need to be implemented if the markets are to withstand further shocks. “We’re going to need to change a whole bunch of aspects of our financial system,” Geithner says. “We should not have a system that’s this fragile, that causes this much risk to the economy.”

“Who Will Survive,” (p. 86). In a comprehensive analysis of the U.S. auto industry, Paul Ingrassia outlines a plan for saving the Big Three—Ford, G.M., and Chrysler. Ingrassia argues that all three companies have, to varying degrees, some of the same basic problems: outdated designs, too many dealers, too much debt, and a late start on hybrids and other alternative fuel models. But the road to survival, and the odds, are different for each firm. Ingrassia maintains that Ford has the cleanest, most achievable recovery plan in Detroit. “The good news is that Ford has lots of cash, and its international operations are profitable and growing (60 percent of its car and truck sales now occur overseas),” Ingrassia writes. “The bad news is that it hasn’t designed many exciting new cars for the U.S. market lately…. I’d bring back the Continental name and cooperate more closely with Mazda, which is one-third owned by Ford.” According to Ingrassia, Chrysler’s biggest need is for more foreign revenue while General Motors needs to shed brands, such as the Saab 9-3, Buick Lucerne, and Pontiac G8.

Plus: Jeffrey Rothfeder shares his vision of the auto industry’s doomsday scenario and Jay Leno shares his opinionated take on how to fix Detroit. “It ain’t that hard, folks. Make better cars,” Leno writes.
 
 “Satan’s Accountant,” (p. 62). In an exclusive profile, contributing editor Claire Hoffman trails Bruce Wisan, an accountant who was sent by the state of Utah to unravel Warren Jeffs’ embattled polygamist sect’s murky finances. Hoffman reports that Wisan is neither a prophet nor a polygamist, but that he holds an important position in the sect. “In a sense, he has been hired by the state of Utah to replace Jeffs as the head of his community,” Hoffman writes. Wisan has been put in charge of the United Effort Plan, the legal trust that the polygamists started by pooling their resources and creating a communal society 66 years ago, now worth an estimated $110 million, Hoffman reports. Wisan admits that the polygamists believe he is an agent of the devil and that they want nothing to do with him. “The people felt like, Oh, he’s going to take the land. He’s working for the devil. Why are you doing these horrible things to us?” Wisan says. “There was great fear of me, great fear of what I was like.” Now, Wisan is in the midst of trying to do something that, to his knowledge, has never been done: set up a functioning economy on the still-smoldering ashes of a theocracy.

“The Problem With Paulson,” (p. 48). Washington editor Matthew Cooper examines how the much-heralded Treasury secretary, Hank Paulson, has failed to accomplish most of his own agenda, and how the subprime mess has only given Paulson cover for his broader failings. Cooper writes, “If you judge Paulson in terms of his own goals, the things he vowed to tackle after he was confirmed, they remain unmet, and the things he wanted to fix are unimproved or worse.”

“Last Founder Standing,” (p. 124). Contributing editor Kevin Maney sits down with Amazon C.E.O. Jeff Bezos for a candid interview about why he started the company, how Amazon can continue to grow with slowing consumer spending, the release of the Kindle, and what he looked for in a spouse. “I wanted a woman who could get me out of a third-world prison. It was really just a visualization for resourcefulness, because people who are not resourceful drive me bananas,” Bezos says.

“Mover and Sheika,” (p. 104). John Arlidge profiles U.A.E. foreign trade minister Sheika Lubna al-Qasimi, a fast-talking, media-friendly 50-year-old princess and the first female foreign trade minister in the Middle East. Arlidge reports on how Princess Lubna is leading the most aggressive economic and social revolution in the region. Under Sheika Lubna, the U.A.E has made some shrewd and at times controversial business deals, including investing in the Carlyle Group, Apollo Management, Barneys New York, and the MGM Mirage. Arlidge writes, “Sheika Lubna is a mix of the West and the Middle East: Think Carly Fiorina meets Condoleezza Rice, with a touch of Oprah Winfrey.”

“Buying Chanel (All of It),” (p. 54). Reporter Willow Duttge completes a back-of-the-envelope calculation of how much the luxury company everyone would love to buy would actually be worth, and comes up with an estimate of $10.3 billion to $14.8 billion.

“Foul Ballparks,” (p. 116). Jessica Liebman examines whether richer Major League Baseball teams play in cleaner stadiums by surveying the number of health-code violations at 11 stadiums nationwide. “In some stadiums, the rats and flies have pretty good seats,” Liebman writes. The Los Angles Angels’ stadium topped the list with a total of 732 health code violations in 2007.

This month on Portfolio.com
The June issue of the magazine, plus additional content including Hollywood reporter Fred Schruers reporting from Cannes, an examination of the rising cost of high art, and an inside look at DC power tables—the restaurants where the power brokers break bread and break news.

 
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