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Diller Can Buy Ask Jeeves Now

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A cash and stock transaction for Barry Diller’s 5.4 percent stake in Vivendi Universal Entertainment (VUE) brings the concern into NBC Universal’s fold.

With this transaction, not only does Mr. Diller end a lawsuit-filled relationship with Vivendi Universal, but also it allows him to position his IAC/Interactive Corp to complete the purchase of the Ask Jeeves search engine.

Mr. Diller’s IAC/Interactive was started by combining the Home Shopping Network with the USA cable network. It now holds interests in such varied web sites as Match.com, Expedia Travel, Ticketmaster, and Lending Tree.

In March, IAC/Interactive agreed to buy Ask Jeeves for nearly $2 billion USD. It would be Mr. Diller’s first foray into the search engine advertising market.

With the deal, NBC Universal now completely owns VUE. GE owns 80 percent of NBC Universal, while Vivendi Universal owns the other 20 percent. Vivendi Universal has agreed to wait one year before monetizing parts of NBC Universal, such as by selling the Universal theme parks.

With IAC/Interactive free to work more with the Ask Jeeves deal, Mr. Diller’s company will be a player in the online advertising market. Ask Jeeves has about 42 million domestic monthly users.

The online advertising and search markets are growing rapidly; of the $260 billion in total U.S. advertising spend in 2004, less than $10 billion, or 4%, is online, with an expected annual growth rate of 13%.

Search is now 36% of U.S. online advertising and expected to grow 24% per year over the next five years, according to Merrill Lynch Equity Research.

David Utter is a staff writer for WebProNews covering technology and business. Email him here.

Diller Can Buy Ask Jeeves Now
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