WHAT YOU NEED TO KNOW
If you have a hard time finding a history for InterActiveCorp, it may be because IAC, created by former Hollywood mogul Barry Diller in 1995, has gone through no fewer than four name changes in the past 10 years.
The basis for the company was the Home Shopping Network and its distribution arm, Silver King Communications, both acquired by Diller in 1995 with funding from cable TV provider TCI. Then came a decade-long series of acquisitions within the online-travel, entertainment, and real estate sectors. Soon enough, the company that had taken the name of its TV network (it acquired USA in 1998) was looking very much like an internet conglomerate. In 2002, Diller sold off the television properties to Vivendi so that he could focus solely on his internet properties. And in 2004, to reflect that shift, what was by then called USA Interactive took the name InterActiveCorp.

WHAT THEY DO
IAC brings in billions of dollars in transaction fees for products and services purchased online and over the phone. Diller has demonstrated a knack for developing businesses in industries that are being transformed by the internet. Under his direction, IAC has acquired more than 65 brands, with a combined (and growing) worldwide audience of 235 million.

IAC organizes its businesses into five areas: Retailing (including shopping networks HSN and HSN International); Services (including travel agent Expedia, Ticketmaster, Hotels.com, and others); Media & Advertising (including Evite, Ask.com, and Citysearch); Membership & Subscriptions (including Match.com); and Emerging Businesses (where new acquisitions like CollegeHumor.com are incubated).

WHAT THEY NEED TO FIX
Diller’s record-breaking $295 million in compensation for 2005 is one reason that Institutional Shareholder Services, which ranks companies based on their corporate governance, gave IAC its lowest rating last year. The finding has concerned investors, as I.S.S. studies have shown that better corporate governance may result in lower risk, increased profitability, and higher valuations for companies.

There are other reasons for investors to be concerned: In addition to recently declining margins, the company has seen profit growth slow for its secret weapon and cash cow, HSN.

WHAT’S NEXT
Diller admits that he makes up IAC’s business plan as he goes along—a reaction to the ever changing internet environment. For years he relied on mergers and acquisitions to spur IAC growth. Now he’s turned his focus toward expanding the company’s existing businesses, having said he plans to invest “a couple hundred million” dollars on in-house content creation to support those units.

The Emerging Businesses group has already begun to reveal some of its efforts, including AskCity (an extension of IAC’s search engine Ask.com) and Very Short List, a daily pop-culture email that seeks to capitalize on the trail blazed by other lists like DailyCandy. IAC’s Media & Advertising group recently announced a partnership with the Huffington Post to be the exclusive seller of that website’s advertising inventory. Diller hopes these efforts will quell investor concerns about lower near-term margin expectations, lack of profit growth for HSN, and the outlook for cash flow in 2007. —Eileen Soltes