Match Group Inc (MTCH) 2009 Q3 法說會逐字稿

Good morning.

I will be your conference operator today.

At this time, I would like to welcome everyone to the IAC Q3 2009 earnings conference call.

All lines have been placed on mute to prevent any background noise.

After the speakers' remarks, there will be a question-and-answer session.

(Operator Instructions).

Thank you.

Mr.

McInerney, you may now begin.

Thanks, operator, and everyone joining us this morning for our third quarter 2009 earnings call, Barry will make some brief remarks, after which I will come back to quickly highlight some issues.

But first I will remind you that during this call we may discuss our outlook for future performance.

These forward-looking statements typically are preceded by words such as we expect, we believe, we anticipate, or similar statement.

These forward looking statements are subject to risks and uncertainties, and our actual results could differ materially from the views expressed today.

Some of these risks have been set forth in our Q3 2009 press release and our periodic reports filed with the SEC.

We will also discuss certain non-GAAP measures.

I will refer you to the press release and the Investor Relations section of our website for all comparable GAAP measures and full reconciliations.

With that I'll turn it over to Barry.

Thanks, Tom.

Good morning, everybody.

I just want to give you a few stats at the beginning of this.

We all sometimes forget just in looking at the revenue and net numbers, just what the network effect is and how big this audience is, this Internet audience, so I just want to roll through a few of them.

First of all, you may not know that IAC is the eighth largest network globally.

We have 216 million unduplicated unique viewers.

That is up 10% since last May.

We have 4.6 billion page views.

That is up 24% since last May.

And 1.1 billion visits, up 26%.

In terms of the mobile world, which we've been very active in, we've downloaded 11 million smart phone apps.

Also the Ask network reaches 47% of the population in this country.

Which is up 30% since last year.

And our toolbar businesses grew 118% since last year.

So we've got challenges, and we'll talk about some of them, but we certainly have growth all over the place in our networks.

Tom's going to discuss some of the specific figures, and of course you see them in the release.

We did have a solid quarter given the environment.

We have certainly improved sequential results.

We've got good cash generation.

Not at what we aspire to but pretty good.

We've been doing planning for 2010.

We're not finished with it.

But I'd like to give you some at least preliminary takes on it.

We see both opportunity and we definitely see challenges in the three businesses that we have considered core.

In Search, it will not surprise anyone to hear that the competitive environment is fierce.

And the big steps that we've been out and after in the last several years in Search and with apps, they've not been achieved.

And you would have to say that the future is speculative.

But in Search we do have a group of assets that are diverse.

They are making a significant amount of money.

And we're going to fight mightily to grow them, grow those revenues.

We've been asked a lot whether we're open to consolidating transactions in the area of search.

The answer is yes.

And it is unlikely that we would be the consolidator.

But, again, in all of this, you can't really make any absolutes.

We do make some progress but the area of search is definitely challenging.

In our local segments, I think you all know that ServiceMagic is performing very well.

It is competitively very strong.

And we think it is going to grow for years.

Citysearch is still, though, in an early stage.

After many years it is still early stage.

It is a very, very complex area.

It has had great progress, it has mastered many things, but organizing local probably is, I would never say last frontier about anything in technology, but it is certainly one of the areas that everybody expected to be colonized and it is far from it at this stage.

I think we've got leadership.

There is a lot of competition.

We don't know yet what Google is going to do locally, although they make statements and show some signs.

We do think that the asset that we've got is unique.

We do think that it has real prospects.

Turning it into revenues, big revenues and profits, is going to take a while.

And then Match, Match is doing great.

And there's nothing more.

You can put a period at the end of that sentence.

So when you think of these three main business lines, it is not news.

I opened this morning with saying that it has both got a lot of opportunity and it certainly has got competitive challenges.

We are beginning to open up a fourth area which we think can become core, and that's media.

And what we mean, I mean by "media" is a fairly, pure-ish content production, and this is both for the Internet and all of the more historic distribution channels.

These areas of interest of ours are InstantAction, which is our online gaming operation, Electus, which is the recently announced joint venture with Ben Silverman, Connected Ventures which has college humor as one of the sites, and The Daily Beast.

Our commitment to this area is real.

And we're going to invest, though we could never say anything close to bet the company.

In capital terms, I think it is a reasonably small piece, say less than 10% of our $1.75 billion or so in cash.

And those investments are going to take place over the next several years.

And we will be open to value creating structuring alternatives, we've said that.

That there is a possibility of venturing some of these operations of ours with other parties.

We're open to that.

But at the moment I'm kind of inclined to hold our hand.

As to capital and the issue of buybacks, we didn't buy very much stock since the last quarter.

We were working on a large transaction with Liberty.

And we spent several months sorting through it.

And, by the way, it was at market, there was no price issue.

And for reasons, none dark, but just reasons, we could not complete the transaction.

There were obstacles, despite the willingness of both parties to proceed.

So for the future there's no change in our views about buybacks.

We're going to repatriate a good portion of the excess capital.

We will do it opportunistically.

We're not going to be held to any defined schedule as to how, when, et cetera it occurs.

But you've seen what we've done in the past, and I would predict we will be like-minded in the future.

So with that, Tom, why don't you make some comments and then we'll get to questions.

Okay, thank you.

Real quickly, in our media and advertising business, at the beginning of October we anniversaried the relaunch of our new Ask.com site a year ago.

This plus modestly improved CPC trends should help revenue trends in Q4.

That said, our longer term initiatives to drive volume have yet to grip and our display revenues are still comping down, so we expect Q4 revenues in this segment to be down year-over-year, and flattish sequentially with comparable margins to the year-ago period.

In personals, the headline numbers announced today, as expected, and we foretold this last quarter, were skewed by the absence of Match Europe which contributed $22.5 million in revenue in the year-ago period, but nothing in the most recent quarter following its sale in June.

Beyond that, the core business grew both revenue and profitability with US subscribers up 9% year-over-year.

Match will face this optical comp issue on the top line until the anniversary of the sale in June 2010, but to an ever lessening amount as we partially replace the lost revenue with continued growth in the core business and contributions from People Media, which should be largely unencumbered by purchase accounting rules in Q4.

In Q3 purchase accounting effects minimized the revenue we got from that business.

I'll remind you that on a normal run rate, i.e., not impacted by purchase accounting requirements, People Media profits largely offset those lost from the sale of Match Europe.

And I'll also point out that we recognize income from our 27% stake in Meetic on a one quarter lag so you'll see the first full quarter of this in Q4 below the line, if you will, in the equity in income of unconsolidated affiliates line on the income statement.

However, we expect single digit million loss this year for the next few quarters due largely to the same purchase accounting issues required by US GAAP that we dealt with this quarter with the People Media acquisition.

So Meetic, as we translate their results to our results, you'll see that same effect.

They are not encumbered by that.

So you will not be able to do a straight calculation of their reported earnings times our 27% stake to translate that back, because there's two different treatments there.

ServiceMagic had a solid quarter, and returned to profit growth despite its operating environment.

All key metrics showed improvements this quarter, with service requests up strongly to an ever-growing and more active service provider network.

The future looks bright for the business.

But I do want to highlight and just remind you that Q4 is the seasonally slowest period for ServiceMagic and we'll have some modest increased investment in our European business as we look to replicate our US success overseas.

So while we expect topline growth to remain robust in Q4, profits are likely to be flat to the year-ago period.

Again, it's a seasonally low quarter for ServiceMagic.

Finally, just a couple of housekeeping items, first going forward we'll reorganize our segment presentation to align with our principle areas of focus and the new media initiatives Barry just discussed.

As such, our emerging business segment will be eliminated but for now you should just continue to expect that the total investment in businesses like Electus, InstantAction, The Daily Beast to be comparable to the current run rate in emerging.

We'll provide more supplemental information on this in Q4 and report the quarter this way in early 2010 and thereafter but I just wanted to give you a heads-up on our thinking.

Second, on cash, the $1.8 billion figure in the press release reflects the sale of 1.8 million shares of open table, and subsequent to the quarter end we sold an additional 169,000 shares and still hold 193,000 shares.

And finally we do still expect to receive an approximately $75million refund from the IRS in the fourth quarter.

We've previously discussed that.

Although just from our definitional purposes this will not be counted as free cash flow.

Obviously real cash flow but not free cash flow per our definition.

With that, operator, let's go to questions.

(Operator Instructions).

And your first question comes from the line of Ross Sandler.

Your line is now open.

Thanks, guys.

Just a couple questions on the media and advertising business.

You noted in the prepared remarks that you saw some strength in toolbars driven by better distribution, can you give us a little more color on where that growth is coming from?

And then any preliminary metrics that you can assign around the coupon initiative at Ask that just kicked off in October, are you seeing higher click-through rates?

And then lastly, Barry, you've not ever, from what we can remember since the spin-off, quantified the total size of the network the way that you did in the prepared remarks.

Now is there any --

They weren't that prepared by the way, let's not elevate them above where they belong, sorry, go ahead.

Anything to read into in terms of the overall size of the network and potential discussions going on there?

I know there were some going on around the time of the spin-off but any update on that front?

Thanks.

On that last question, I do not know what you are alluding to.

Could you help me a little bit?

I just do not know.

I do not quite understand the question.

I don't remember you having quantified the total reach of the Ask network in terms of global uniques, in terms of US penetration, some of the statistics that you just provided.

Just wondering, why the change from prior?

You mean why did I do it?

I did it because yesterday I was looking over stuff and I was really impressed with these various statistics.

Everybody is in the day-to-day of business and life and you don't ever pull back.

And I was looking at this and I thought, I should tell people what the size is of this relatively small company in terms of its reach and its impact in terms of Internet life and its size, and in a lot of respects its growth.

And so that's really why I did it.

I had no other thought in my head.

Tom, you want to take the first two?

Yes.

On the first two questions, as Barry alluded to, we have a pretty varied and diversified search business.

A couple of the strengths for some period of time have been on the toolbar side.

It runs a wide range of activities, both what we call our fun web products which are these proprietary fun products, including Smilies and Zwinkies and our newest one is myWebFace which you can go check out and create a cartoonish version of yourself.

And the business tends to move around a little bit but we've had pretty good grip on it in Q3 in the overall scheme of things.

Certainly the toolbar space is competitive, there are lots of people competing for a presence on the desktop and in the browser but we're pretty good at it.

And we also have large partnerships which we're very successful at signing and renewing with people like BitTorrent and Gamevance and others who are otherwise downloading software and we partner with them to download a toolbar with that process.

And so it's just a lot of ground level execution.

Search is a big space.

Tell you things you know.

Toolbars are a critically important and growing part of that, and we think that we have good creativity and execution there.

And it's one of the reasons we've been able to compete reasonably successfully in search, despite our much smaller scale.

Your next question, your second question was on coupons.

It's really very early.

I think we actually yesterday had a conversation that they saw some encouraging data on frequency but it is literally a week or two.

And so I'd just say it's premature.

We just don't know.

Next question, please.

And your next question comes from the line of Jim Friedland.

Your line is now open.

Thanks.

First on media, you're indicating flat Q over Q and down year-over-year for Q4.

Just given the seasonality and that you are anniversarying that trend which caused some demonetization, why wouldn't we see maybe even just a couple of percent Q over Q bump in Q4?

And on the emerging segment and your comments relating to incremental investments in media, your run rate OIBA loss on an annualized basis is about $36 million based on this quarter.

As we look to 2010, I know you haven't finished the budget but should we expect that bucket, which will include, even though you are going to change the reporting, should we expect that loss to be greater than that $36 million run rate?

Thanks.

Yes, Jim.

On media and advertising, you are right, we were, I think, down 11% this quarter.

I hope and I guess currently expect to see an improvement in the year-over-year comp on that.

But I think directionally moving in the right direction.

I don't currently anticipate getting back to flat or slight growth, as you say.

We will benefit from the comp issue on the new product.

That said there are still some things going against us.

One is we're still even adjusting for that comp, and we did see a big improvement in revenue per query comparables year-over-year as we anniversaried that site.

We're still not back to flat.

It moves around day-to-day and week-to-week and also search property by search property.

But right now, as of October month-to-date we're seeing flat CPCs but we're seeing some offsets in click-through rates.

And so we're still comping down generally -- again, it varies by property -- on the RPQ side and on the query side it is a mixed bag, we have some properties that are very strong, others -- and you can see them generally in the comp score and reported data -- that are still down slightly year-over-year.

And then the last piece is, in that segment, while it is not a huge piece of the business, we still are comping down on the display side in Citysearch and Evite which factors into that.

So those are some of the factors and when you add it all up it looks to us to be kind of sequentially better but still down modestly year-over-year.

I think on your last question, look, I think it depends.

It's early.

I think right now, and we're going to reorganize this a little bit, but let's just talk as of the current presentation, organization of it.

Right now you have in there three principle investment areas that Barry outlined, discrete media businesses, and then we have some other businesses that are net positive.

Pronto this year, for example, is a net positive, Shoebuy, both in difficult environments.

I think our current expectation would be if we got positive contribution along reasonable lines, not heroic but reasonable lines, from some of those businesses next year then that, in connection with the investments we'd intend to make, would keep it at roughly the current rate.

It's fluid, we don't want to be absolutely wedded to it.

If we don't get some of those positives, it could be a little bit higher.

We're not talking dramatically, I don't think, in the overall scheme of things.

And, as Barry said, we do tend to think of this to a degree.

We're not immune or ignorant of the P&L impact.

But we also have to think about it relative to our cash and capital balance, and our obligation to sensibly redeploy at least a piece of that, a small piece in the overall scheme of things, but a piece of it back into future potential growth areas.

Within, I think responsible, disciplined constraints, we want to build these media businesses.

We think there's tremendous opportunity in media going forward, at least our version of media.

And that is not in any way to play in the world of what we all know as gold media.

There's opportunity but there's also, I think, a good solid disciplined approach with the knowledge that if you are going to try to build a business, you are going to have to invest to get there.

Okay.

That's great.

Thanks.

Next question, please.

And your next question comes from the line of Jeetil Patel.

Your line is now open.

Great, thank you.

A couple of questions.

First of all, your steady state OIBA margins for Match and the ad business, can you just talk about what do you think the overall margin profiles of these businesses look like since obviously Match continues to perform well, you made some investments in the Ask side of the business at the beginning of the year.

Just broadly, are there investments that you are looking to make on an ongoing basis from an advertising basis in any of these business lines or should we anticipate that margins show some consistency as we look ahead over the next couple of years?

Is this the profile that we should be looking at?

And second question, around the content production initiatives which are building quite nicely, Barry, what is your take on the monetization model of this major initiative?

Do you think it is going to be in the form of local and display advertising or do you think it is a subscription or other sort of charge model that you look at?

Thanks.

I'll take the first one on the margins.

You know, Match is funny.

I think for a long time, maybe close to ten years in some respects, we've been saying we don't intend to run it for margin per se.

We are looking for OIBA growth and cash flow growth.

And if we can find ways to spend incremental dollars, they tend to be in marketing but they could also be in product and technology or some degree of international expansion, even with the sale of Europe having been complete, we're still in a number of other countries, and it has the nominal effect of decreasing percentage market but it grows OIBA and cash flow, then we'll take it.

And so that is the philosophy, that's the strategy, that hasn't changed.

What's tended to happen as you follow the margins, we were 23% a couple of years ago, 25% last year and we'll end up certainly a couple of points higher than that most likely this year.

And when you are getting good volume growth and pricing is stable, which is what it has been, then there tends to be margin opportunities.

So I don't expect, I don't forecast, I don't plan around margins growing from the current levels.

That said, I don't do any of those things expecting to aberrationally shift them down or that this was aberrationally higher or anything like that.

We'll plan it around growth.

And we expect margins to be stable-ish and if there are opportunities, we'll take that.

On the media and advertising side, obviously much tougher and much more volatile, just given some of the things that have gone on in the ad market and our own initiatives and things like that.

I think you see this year we've been really good at sharpening the pencil and taking out cost in response to the macro conditions and the topline softness.

I think you see that in the growing margins, the close to 16% margin in this quarter.

Obviously we need topline growth there.

And I think if we get it, there will be margin opportunities back into the high teens or something starting with a two, which this business has historically achieved.

And without it, we won't.

And that's perhaps stating the obvious.

But that's the way we're thinking about it.

All right.

On revenue, I don't think anybody would question that revenue is going to increase in Internet properties, across the internet.

That to me is an absolute given.

It is going to increase year on year, year on year for as long as I could see in the future.

It's very, very, though, early days in how that revenue is categorized and the incredible tonnage of inventory, and the mathematical ease with which it is bought.

And I'm talking here principally about display advertising, remnant advertising which is sold very cheaply.

It is content where very little of it is sequestered as premium.

And if you participate in this, for us, I believe, for everybody that is engaged in premium content, and by that I do not mean the content that is organized through various search methodologies and other things, or particularly user-generated content, but what I do mean is content that you make.

I think that that is going to, over time, be segregated from the mass of display and remnant advertising rates.

And that's really what we're doing, experimenting during this period, with differentiating and looking for wise advertisers that are not just buying by saying we'll allocate another 2% or 4%.

After all, the whole internet takes maybe 5%, 7% max of advertising revenues right now.

This is why I absolutely believe it's going to grow.

So I think that our job is, during this period, to invest in the content sensibly, to begin to differentiate it, to begin to get premium pricing.

But I don't think it stops there.

I do believe that we're going to have multiple areas of revenue.

And I think that those will come from, in a sense, various priced premium content.

Meaning that some content will be, I think, in all premium, will be at a level much above the current rates.

Then I think there will be a category that you will either subscribe to or you will one-off pay for.

And then I think the other part of it is going to be direct transactions which are going to go through, I think, a lot of that content.

And so I've gone on a little bit about this.

I certainly do not believe that making premium content is going to depend upon what we now think of as the display advertising model.

One won't support the other.

So I could go on about this for a while, but I think that is at least the summary of my thoughts in this area.

Next question.

And your next question comes from the line of Mark Mahaney.

Your line is now open.

Thanks.

Just wanted to ask a question about the ServiceMagic business, two parts.

Just to understand the guidance for Q4, is it the OIBA profits or the OIBA profit margin is likely to be consistent with the year ago quarter?

And then it looks like you stepped up some television advertising around the product, you've got record high revenue here, very strong growth but the margins seem to be taking a hit because of that advertising.

Can you talk about how you think about what the margins, how you want to run the business going forward, how consistently you want to run the TV ad campaign, for example, in support of ServiceMagic?

Thank you.

With Q4, it's funny, because it's such a seasonally low quarter, the year-over-year changes get absolutely magnified by $200,000 one way or the other.

So it's a little hard to discuss.

I think we made $2 million in the business in the year ago period, OIBA, just people not doing work around the home in Q4, they are focused on the holidays obviously.

We think that that will be up nicely on a percentage basis, percentage basis of OIBA in the domestic basis but even if it is an heroic percentage, it might be $1 million or $2 million, just not move the needle for IAC given the seasonal nature of the business.

And we also think that we're going to put a small amount of money that would kind of offset that into the international business.

So it's flattish on an OIBA dollar basis with good revenue growth.

It says nothing about the state of the business.

It's just the nature of Q4, the nature of a small amount of international.

And as we look to next year, the business feels currently very solid.

Obviously it's very dynamic.

It moves around.

We saw that in Q1 of this year, which was not good and then the rest of this year so far has been good.

So we feel good about it generally.

On margins, I think the second question was margins in ServiceMagic longer term, it is a business because of its nature you need a reasonably big sales force.

In ServiceMagic's case, it's teller sales, signing up local service providers.

You need very good geographic coverage and you need very good coverage by types of jobs, and at the same time you have to generate via marketing lots of consumer demand.

So it's not likely to ever be the type of business that does 40% margins or something like that.

There's probably just too many activities that you have to undergo.

That said, to be operating at the kind of margins it's operating at now off of this scale, I think shows there is opportunity in the future.

Basically 20% this quarter, 20% a year ago.

And, as that topline continues to grow, which is what we expect, it's still a tiny fraction of market share of available advertising spend in that category, there should be margin opportunity.

And part of that comes from building the brand.

And you referenced TV advertising.

They've been very successfully testing using really cheap spot market purchases in local markets, advertising.

One of the nice things about this business is when you spend money on advertising, TV or radio, you get a little bit of a double whammy because you get some consumer benefit, you also get the service professionals recognize your call.

And so when the salespeople call them to sign them up as a customer, they go, "Oh, yeah, I heard your ads," and there is a legitimacy bestowed whereas maybe they otherwise weren't.

So we're really encouraged.

It's early, we've not spent a lot of money, it's been a few million dollars, but we're really encouraged by the role advertising can play in this business.

And if we do that, it may have some longer term margin benefits.

But I think more importantly that the prospect of making ServiceMagic a true brand, which it's not today, just gets me very excited because you start thinking about the forever nature of the business and how big it could really be and I now, it drives in my head to match, and obviously I'm getting way ahead of myself but I think it's a real opportunity for us.

It's legitimate.

There is a real possibility of building a consumer brand with ServiceMagic and I think we're going to be at that.

We're going to be investing in it.

It will take a long time.

We're not going to blow up the P&L to do it, either, if that is a little bit of the question behind the question, we're going to do it very sensibly and just grow it, try and grow the business year after year.

I don't think there's any shortcut to building what we want to build there.

Thank you, Tom, thank you, Barry.

Next question, please.

And your next question comes from the line of Ingrid Chung.

Your line is now open.

(inaudible) around Citysearch, I was wondering how you position Citysearch against Yelp given the increasing popularity of social media sites and recommendations from friends.

And what kind of opportunities do you see for Citysearch to maybe acquire other local assets?

And then second question is what kind of increased competition or what kind of impact from Bing have you seen on Ask?

As to Citysearch, I don't think we're going to be in acquiring mode.

We acquired a little bit --

Urbanspoon.

We acquired Urbanspoon, which is a great little acquisition, and then we acquired another little thing recently.

But I don't think it's going to grow by acquisition.

I think that it's different.

It is really a different service than Yelp is.

And certainly Yelp has grown.

Yelp, as you alluded to, is of course review-based with UGC.

Citysearch has so much structured data that it has gathered over this period.

And Citysearch now is essentially the only micro search site out there in any given communities.

I think Citysearch now searches, I'm going to, maybe you can prompt me, on the individual cities or suburbs or whatever, individual local sites that is in the tens of thousands.

And I think there's a little scrambling going on and I think that I will probably get a figure sometime soon.

But Citysearch is actually also three separate businesses.

75,000 is what I am being told.

It is enormous.

And, you can go into Citysearch and you go beyond Zip code.

It's as local as you can get.

Over time we think that's a very good organizing principle for this local service.

And then there is the Citygrid business which is a completely different business.

The difference between us and Yelp, I believe, in revenue terms, if I'm not mistaken, is not a great deal of revenue at Yelp.

Correct, correct.

There's not a huge amount at Citysearch but it is substantial.

And so I just think they're different models.

Tom?

What we're trying to do at Citysearch, clearly we have to consumer position it against Yelp and, by the way, 20 other sites, be they very vertically specialized sites in restaurants or hotels or whatever it may be, against IYPs, the yellow page sites, against newspaper sites.

The list of competitors is long.

Yelp has clearly done a very good job in what they do, in those markets in review-based, social-media based things.

However, relating back to something that also serves as an advertising platform is a very different thing.

For example, it's very hard to sell an advertiser when there's lots of reviews on there that maybe perhaps are not particularly favorable.

So it's not very simple in this business to build a giant audience and then go, okay, now we'll just turn on the advertising and you just flip a switch.

You kind of have to build the two in tandem.

So we'll have broad consumer positioning, with lots of information sources, hyper local as Barry said, but as importantly, maybe more importantly, we're building a very large network with, today, over a dozen providers, what we call resellers, other local advertising companies who are feeding their advertiser budgets into our system.

50-plus publishers on the other side who serve as repository for ads either generated by our ad sales or those resellers, and we're in essence, standing in the middle.

It is the Google sponsored listings of local at the earliest of stages.

And I think if you talk to people in the business, we are ahead in terms of creating this network.

It's a long, complicated, arduous task but today, for example, literally today and every other day, Superpages now is a material contributor of advertising dollars via their clients to the Citygrid network, and there's others that are following and scaling.

So it's tough task, it is a long task.

We still think there's asset value there but it's going to take a while to pull it through.

Okay.

Next question, please.

Your next question comes from the line of Doug Anmuth from Barclay's Capital, your line is now open.

Thanks for taking the question.

Barry, I was hoping you could give some more color on the kind of obstacles you mentioned in terms of Liberty discussions.

And then secondly can you talk about how you evaluate the effectiveness of your NASCAR marketing spending you've done so far this year, how you think it's paying off and would you expect to do similar deals like this going forward.

Thanks.

No.

Bluntly, on Liberty.

Again, I do not want to make a big drama out of this.

It really wasn't a drama.

But we were, for technical reasons, I would call it, we were not able to proceed despite the desire of both Liberty and IAC to proceed.

Will we in the future?

I don't know.

Meaning would we do a transaction with Liberty?

I don't really know.

I couldn't predict it.

But that doesn't have anything to do -- well, I shouldn't say anything, it certainly had a lot to do with it this last quarter, but we're considering that transaction not going to happen, not on.

And so my remarks about what we will do going forward that I made earlier are the ones that apply.

As far as the second question relative to NASCAR, NASCAR definitely was helpful to Ask.

I don't think that we will be pursuing these kinds of high-profile, high impact, high-cost, so to speak, advertising initiatives for Ask going forward, though NASCAR was a very good partner for us and I'm not at all excluding the possibility that we would continue with them in some fashion.

It was positive, I think positive for both Ask and NASCAR itself and for other NASCAR partners.

But I don't really see, contrary to what some of the competition is doing, I don't think retail advertising is particularly helpful in this search business.

It gives you, without question, you put an ad out, you are going to get a reaction to it.

But are you going to change people's habits by advertising?

I think it's unlikely.

I think that you'll get momentary attention.

I don't think that you are going to get that much retention.

I don't think it's worth the buck.

We've spent, not a huge amount, but we've spent enough bucks I think, by this time to know.

Next question, please.

Yes, thank you.

And your next question comes from the line of Justin Post from Bank of America.

Your line is now open.

Hi, Barry, obviously the allocation of your $1.8 billion in cash is going to be a key driver of the stock over the next couple of years.

Can you talk about your methodology for allocating that capital and maybe the type of ROI thresholds that you look at when you make a content investment or other types of investments?

Thank you.

Look, you can make any protections you like.

I would say that most forward ROI projections are not worth the paper that they are written on.

I don't hold much for that process.

We've said in the past several years, and I think you've definitely seen it, that our discipline in terms of acquisitions is pretty tight.

I think we've made a couple of hundred of million dollars of acquisitions over the last two-plus years.

So it's unlikely.

I can't say it won't happen because I think to say it is foolishness.

But I think that past is prelude here.

I just don't believe we're going to be out there making a big acquisition.

And I think the smaller acquisitions that you've seen us make have been very hard-headed and, in all respects, successful, very nice returns, certainly exceeding the kind of norm that anybody would put on a little piece of paper when you're talking about capital.

And it's why I've said that I just believe that over the next years that repatriation is going to be what is going to happen with this capital, rather than investment.

And that by investment I mean in either acquisitions or that much in our own businesses.

That is about the most -- I don't know, Tom, if you would like to add any to that.

Yes.

Really just a couple of stats.

We've done really only two -- and I hesitate to use the word sizeable but all things are relative - acquisitions, in the last two years, Lexico and People Media.

Both are performing above plan, we're very pleased with both.

And over the last two years we've actually generated more in net cash proceeds from dispositions than we've spent.

And that includes the Shop Channel sale a year ago.

And even this year I think we've net cash spent under $50 million, because we obviously sold the OpenTable.

And so we're as aggressively as we can trying to manage every element of cash and sell things that don't make sense.

We still have some other unconsolidated assets.

I think you are all generally aware of what those are although they are starting to be smaller relative to the total.

And be really, really prudent on the cash side.

Okay.

Thank you.

Next question, please.

Your next question comes from the line of Brian Fitzgerald from UBS Securities.

Your line is now open.

Thanks.

Focusing on Match, excluding Europe and People Media, revenues up 5%, subs are up 9%, wanting to know if you could provide some more color on what drove the growth there?

Yes.

The business, first of all, we've had good growth both in the US core business and what remains of our international business.

Obviously that sub number is a domestic number but we still do have an international business in Japan, Australia, Canada, and a number of other places.

It is not a big percentage of the business but I bring that out because I think that it is probably a little bit lost on people with the European sales.

On the core side, on the core domestic part of the business, in this business it is always about marketing and distribution broadly defined.

One of the benefits, I think, of macro conditions and Internet advertising market weakness is that we continue to open doors and find channels available to us to advertise and market online, be it straight ad buys, whether it is a display ad buy, for example, or some form of integrated partnership with partners that perhaps weren't doing it before, or they were only doing it to a certain degree and were able to, in essence, generate more traffic from those places.

So as the portals, AOL and MSN, for example, have been big partners in this business for a long time but they've declined as a percentage of our business reasonably consistently through the years just given the nature of how people think about personals and where they go to look for personals.

We've really broadened out those distribution sources, and I think that that will continue.

Match is a very effective way to monetize traffic if you are a content site and that's a big piece of it.

And then conversion of whatever traffic you do drive to the site, which is about product, product, product.

And we have a great team down there.

Very focused, literally, hour by hour, on every decimal point of conversion of everybody that comes to register, by channel, by site, by type, part of the site they went to, by ethnicity and age and every other dimension, and there's always opportunity to improve that by improving the experience.

So the personals market is a big market.

It can be much bigger over time.

There's external forecasts that support that and our own experience.

We're the leader.

And we think that we'll continue growing the business and growing the category as the leader.

Great.

Thanks.

Next question.

Your next question comes from the line of John Blackledge from Credit Suisse.

Your line is now open.

Thanks, a couple of questions.

Just wondering how many shares you guys have bought back thus far in the fourth quarter.

And then on the media side, is the content, is that going to be on your sites or would you be selling that content to other sites?

And is the investment mostly going to be in internet video and is it in short form or longer form?

If you can give us some color on that.

And then lastly, like Barry highlighted at the beginning of the call, growth in traffic and usage across most of your key properties has been great over the past year, I'm just wondering how you guys are thinking about monetizing that traffic, as we head into 2010 which is, Barry, which is obviously key heading into next year.

Thanks.

On the repurchase question, we disclosed in the release what we've done since the last quarterly announcement, and as indicated it was less than a million shares.

We're not going to provide any supplemental disclosure.

That's current as of a day or two ago, I guess it is.

So you basically have that information and then we'll talk to you again in 90 days on that.

Now on your second question, could you tighten it up just a little bit for me?

Is it mostly going to be video content via your site or are you going to be selling it to other sites or both?

Just a flavor of what kind of content.

Let me stop there.

There are two areas of content that we're engaged in, two buckets.

One is in the area of games.

We're both making a platform for online gaming.

We have a toolset that we think is unique for us and others to make and distribute online games through our instant action, so to speak, portal.

And we are a producer of online games.

So that's that segment.

In terms of video, we produce more videos a week than anybody else does.

These are primarily for college humor.

But we also distribute those videos everywhere.

Obviously they're on YouTube.

And they are very fully distributed in terms of selling them.

We don't, quote, sell them.

We have revenue sharing arrangements with anybody that distributes our videos where we have commercials embedded in them.

And then the third area -- and, by the way, that is short form.

We do have longer form video.

And the longer form videos, we did a television series for MTV, we have some other series developments in the works.

We are a producer through our notional, which I don't think we've really announced it yet in any serious way, I think we do that next month, in some small time celebration of their opening, but notional producers for syndicated television networks, syndicated programming television networks, television networks in the area of cable network.

We have ambitions to produce programming of all lengths.

And for both the historical media and the Internet.

We are certainly not going to do it in the business model of let's call it the incumbents.

So we will approach it in a different way.

And then the other area is in the news and information area with The Daily Beast, we produce a great deal of original content.

It's why The Daily Beast has grown so greatly in just, less than a year, really, of actually being up and out there.

And that is in the area of journalism and all different kinds of topics and subjects within The Daily Beast.

So that's a sketch through of the kinds of content production that we're engaged in now and I think we'll be engaged in in expansive ways through the next several years.

Great, thanks, and just lastly on the monetization of your traffic growth and usage growth, if you can talk to that as we head into 2010.

It's a widely disparate activity.

Obviously search to us is key.

I talked earlier in the call about some of the trends in that area, in terms of revenue per query.

Search is, in and of itself, a very effective high monetization activity and so relative to the world at large, we're at pretty good levels.

Obviously the current trends have been down for lots of the reasons we've talked about.

So we'll see how that plays out.

And in our local and personals areas, we think that it will continue to grow for the aforementioned reasons.

We'll have one last question, please.

And your next question comes from the line of Jason Helfstein from the Oppenheimer Company.

Your line is now open.

Thanks, Barry, just a quick question on Liberty and then a follow-up question on Match.

Do you have any interest in any of Liberty's assets and perhaps would you consider a stock swap for any of their assets?

And then on Match, have you guys seen less promotional efforts by your peers in this quarter?

And also there's the free sites, particularly with Plenty of Fish I think has had pretty good growth, I'm just wondering how you guys try to convey the value to consumers of paying for the service as opposed to the alternatives that they have.

Why don't you take that last question.

I don't think there's been any discernible change in competitive action.

I think that we have, I guess one formidable spender, which is eHarmony that people are aware of, and then lots of other competition all over the place that tend to be more online centric, although certainly some of them dabble in television.

And I would say that the competitive environment is tough and feisty, but nothing different than what it has been, better or worse, over the last several quarters or years.

Sorry, your second question?

The first question was on Liberty and assets.

No, we were not talking about an asset swap, we were talking about a pure purchase of their shares.

I think if we ever reopened again, I can't say that we wouldn't consider something, but there's nothing there that I think is really appropriate to our business lines or things that we are either currently engaged in or interested in, so I think if there are any further discussions with Liberty, I think that they will be along the lines of pure purchase of their stock.

And, sorry, I just remembered that you asked about PlentyofFish, certainly they've grown, there have been a number of other free sites, they grow in terms of audience.

We've not measured or seen any discernible impact of that on our business.

I think that people realize that it is just fundamentally a different thing.

Match's sweet spot is kind of late 20s and up.

I think paying is a bit of a filter.

There's a seriousness of intent when you come to Match.

Your intent may be dating, your intent may be marriage, it may be other things, but whatever your intent is you are a little more serious about it.

I think that paying is actually a good thing.

And as to conveying value, look, it is on the site.

You can register and search and whatever you are looking for, we're going to have more than anybody.

And it is tools and technology and everything else.

And you get to see all that for free.

And so the proof is in the pudding.

Lots of people see it all and then pay.

We watch the free stuff very closely.

But I just think it is a different animal; that is what it has proven to be over the last several years.

With that, thank you all.

We look forward to seeing you.

Seeing you?

I don't think we're going to "see" you but we certainly will be talking to you next quarter and in the interim we hope that everything goes as well as you would hope.

Thank you all.

And this concludes today's conference call.

You may now disconnect at this time.