IAC’s Diller sees more Web media investment

IAC/InterActiveCorp will invest hundreds of millions of dollars in Internet programming, betting that professionally produced entertainment will win over Web viewers, Chief Executive Barry Diller said on Wednesday.

Diller also questioned the efforts of the hugely popular Internet video sharing site YouTube, owned by Google Inc., as it tries to woo big media companies to distribute their entertainment over its service.

Internet media conglomerate IAC is home to shopping network HSN and online mortgage broker LendingTree. The company has focused for years on building up Web outlets for transactions, from booking vacations to reserving tickets for Broadway.

Diller played a key role in media’s evolution as a movie studio chief and a founder of the Fox television network. Investors and media watchers alike have asked when he might bring that expertise back to his Web business.

“I never left … it’s just different kinds of programming,” Diller said at a McGraw-Hill Media Summit in New York. “None of us can fool ourselves, everything will be in digital form.”

IAC recently purchased youth Web site CollegeHumor.com and is working on an Internet comedy site “23/6″ that takes a satirical look at daily events.

“We’re just going to keep rolling them out,” Diller said, adding the company would invest hundreds of millions of dollars in such ventures over time.

In another media tie, IAC’s Ticketmaster service said on Tuesday it would give customers a free song download from Apple Inc. popular iTunes for every concert ticket bought.

YOUTUBE BOOST, OR BUST

IAC reported on Tuesday an 85 percent drop in quarterly profit, hurt by charges taken for its discounts business, but posted strong growth for its Internet search and media business, including Ask.com and Citysearch.

Ask,com could over time capture a double-digit share of the search market now led by Google, Diller said.

But it is far from guaranteed who will be the main beneficiaries of the digital transition, including YouTube which aims to become a dominant media pipeline and reap a greater share of Internet advertising, he said.

Media company Viacom Inc. last week demanded YouTube remove more than 100,000 video clips of its shows after the two companies failed to reach a distribution agreement.

“Media companies are saying ‘We’re not going to let you (YouTube) get so strong in distribution,”‘ Diller said. “I think you’re going to see a domino effect on this.

While Google was negotiating its more than $1.6 billion purchase of YouTube last year, behind-the-scenes talks were going on with many media companies about bringing them into the service, but the talks failed to produce deals, Diller said.

“The issue is availability and everybody is going to make everything available” with the right payment model, he said.

YouTube and News Corp.’s MySpace social network have enjoyed exponential viewer growth in a short time by allowing people to share home-made videos, photos and music.

While Diller agrees such material will continue to draw audiences, he said it will not supplant professionally produced entertainment when it comes to attracting large viewership.

“Professionally made products by people who have the ability to do things that make you laugh or cry … that is going to be where this will develop,” he said.