IAC/InterActiveCorp, the Internet and media company assembled by billionaire Barry Diller, said fourth-quarter profit fell 98 percent after the company wrote down the value of its entertainment coupon division.
Net income from continuing operations declined to $2.69 million, or 1 cent a share, from $119.5 million, or 35 cents, a year earlier. Sales increased 7.8 percent to $1.82 billion, below the $1.9 billion estimated by analysts and the slowest pace in a year.
The IAC division that houses Ask grew revenues 46%. But it’s very strange that Entertainment is performing so poorly. Consumers love coupons but, of course, the company and its product are not optimized for the Internet. And the subscription business model will eventually come under threat from online sources.
According to a forecast I’ve done, online coupons will account for 5% of all coupons distributed in the U.S. by 2010. And the value of online coupons redeemed (locally) will be $2.28 billion (out of a total “face value” of just over $16 billion for all online coupons).
Thus there’s a big opportunity that hasn’t been captured by anyone yet. It will also extend to mobile.