Barry Diller has seen this movie before.
The billionaire chairman of digital media conglomerate IAC (NYSE: IAC) and former Hollywood mogul lashed out at me over the threat posed by generative artificial intelligence (AI) platforms like ChatGPT. I’m here. his particular beef? Its algorithms and bots could potentially scrape, repurpose, and monetize content from Diller-owned publishers such as his People, Investopedia, and Better Homes & Gardens, as well as publishers heavily commissioned by the industry. I have.
For Diller, this is like what happened some 25 years ago. The Silicon Valley search engine brethren (not just Google, but Excite, Yahoo!, Lycos, AltaVista, etc.) persuaded old-school newspapers and magazines to slap their content. On the web without charging.The pitch was something like (read like Jeff Bridges big lebowski): “Hey, there’s this new thing called the Internet, and everything there is free, so you better get familiar with the program.”
Faster than you could say ‘web crawlers’, publishers acquiesced and search engines (most of which ended up being Google) said ‘thank you very much’, robbing the news industry of all ad revenue I was allowed to.
“What do we have to do before this takes off and becomes disruptive,” Diller tells me urgently.[is] Rules and procedures should be in place to protect the publisher’s ability to actually publish.
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Like George W. Bush’s famous gaffe. Be deceived and never be deceived again.
In fact, avoiding being duped again is exactly what Diller and other media company leaders have in mind when it comes to AI abandoning intellectual property. To that end, the dealer Barons Parents Dow Jones and Germany-based Axel Springer persuaded them to band together to combat this perceived threat. (The publisher declined to comment.)
Diller also said he and other media executives are in touch with Microsoft (MSFT) and Alphabet (GOOGL). Microsoft, the owner of ChatGPT, has invested billions in his OpenAI, and has incorporated the ChatGPT Large Language Model (LLM) into the latest version of Bing. Alphabet’s Google has Bard. It is similar to ChatGPT and based on his rival LLM. The purpose of these discussions, Diller said, is to reach agreement on how to license content in this terrifying new world of AI. (Last month, News Corp CEO Robert Thomson said his company was in talks with AI companies about compensation for publishers’ use of their content.)
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Diller, 81, may not come to mind as the great lion of the publishing business. But even though his stock has plummeted recently, he has a number of qualifications that some of his peers are lacking. Since the mid-1960s, he has been negotiating media rights as his junior executive at ABC. Brokering agreements between publishers and between publishers and his AI cloud speaks to Diller’s skill set. Navigating that complexity may require Diller’s another strong suit: iconoclastic thinking.
Sitting with Diller in the IAC office last week got me thinking about his iconoclasm. There’s a blue blazer over an ill-fitting denim work shirt that looked like it was last worn at Woodstock. A hairstyle only Terry Bradshaw could love. and brutal candor.
Diller’s architectural ambitions are also a powerful manifestation of his “think differently” mindset, especially with the stunningly futuristic Frank Gehry-designed IAC on the Hudson River, completed in 2007. We have our headquarters. The appearance of a building of enigmatic beauty. Also nearby is Little His Island, his 2.4-acre man-made island in Hudson-cum-Public Park, largely funded by Diller and his wife Diane Von his Furstenberg (approx. It will cost $300 million, he says). Before.
But even more peculiar is the IAC itself. IAC, a media holding company, incubator, and private equity firm, is just one category. “We are kind of an anti-agglomeration conglomerate,” says Diller. “We build a company, and when we feel we’re at the stage where we should be independent, we spin the company out. So far he’s done it 12 times and then we start the cycle all over again. We build again. is in the process of
Spin-off companies include Expedia Group (EXPE), Match Group (MTCH), and Ticketmaster. New acquisitions include media company Meredith and his 17% stake.
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MGM Resorts International (MGM). Trading can be dizzying, and like any portfolio, diamonds can turn into dogs.
“Honestly, your stock is…” “You’re doing terrible,” he interrupted me. I agree. The IAC has seen a staggering 68% drop over the past two years.
S&P 500.
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what happened?
“We bought Meredith for about $3 billion a year and a half ago,” he says. “The ad market hasn’t always been strong during his past year. Another is that he underestimated the difficulty of integrating Dotdash. [a digital publisher] and Meredith, who was primarily a print publisher. It was very troublesome. Overestimated early turn results. and Angi Home Services [the old Angie’s List] We were experiencing a complete revolution at exactly the same time. Diller expects the business to rebound in the second half of the year. “I’ll be mad,” he says, if stocks don’t recover.
Historically, long-term shareholders have been rewarded for standing up for their beliefs. His IAC Investor deck in June has created $60 billion worth of his value for investors since 1995, with compound annual growth of 13% of him. (Admittedly, his IAC returns are lower today.)
As such, Diller is focused on putting IAC back on the outperforming track and keeping AI beasts in check. He asks dealers who exactly make up the last category.
“At this point, I really don’t know who I’m fighting,” he says. “I have to say that the two major players right now are definitely Bard from Microsoft and Google. Microsoft has only 3% of the search business and has very little advertising, so it’s not a big risk, Google has a lot of risks.…As a matter of fact, Google is at each other’s door The outreach from them is on par with ours.”
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I asked Google and Microsoft about this. Donald Harrison, Google’s president of global partnerships, told me in an email: “As we develop features powered by LLM, we will continue to prioritize experiences that drive valuable traffic to the news ecosystem. We are continuing.” Microsoft declined to comment.
On the Microsoft issue: In early March last year, The Wall Street Journal reported that the Justice Department and Securities and Exchange Commission had announced that Diller, his son-in-law Alex von Furstenberg, and billionaire media executive David Geffen had Activision Blizzard reported that it was investigating a large deal it made in its shares (ATVI) in January 2022, before the company agreed to be acquired by Microsoft. It strongly denied that a transaction was going on. “It was just a lucky bet,” he told the Journal.When I asked his IAC spokesperson what he had to say about Diller, they responded:
Another aspect of his AI struggle is that when diller works with other publishers, he has to treat them lightly so as not to violate antitrust provisions. “Our lawyers advise us to be very careful. We need to get regulatory approval. We can do that in trade groups, but we can only do so to the limit.” (On Thursday, the industry group released a statement of principles regarding the use of content in AI systems.)
“We can’t just say stop the train. How do we coexist?”
That’s the problem.
After the interview, Diller recalled driving with each other in Manhattan. It was a sunny weekend morning, but it was still early so the traffic was light. I drove my Ford Escape across Central Park, turned right onto Fifth Avenue, and stopped at a traffic light. “Then,” I said to the dealer.
“That was a Bentley,” said Diller sharply. “I never drove a Rolls-Royce. But yes, I remember. I waved.”
Write to Andy Serwer at andy.serwer@barrons.com.
