Diller’s Dead Money

The IAC/InterActiveCorp decision to spin off four separate public companies including Ticketmaster may not have been such a great idea, according to Will Ashworth, a financial industry observer writing in Forbes’ Investopedia.

Ashworth was giving the hindsight treatment to another piece from August, by another writer, that reasoned the spinoff would create additional shareholder value for each of the five remaining companies – the four spinoffs plus parent IAC.

In breaking down the performance of those companies since the spinoff, Ashworth reports only two – Interval Leisure Group and IAC itself – are worth investing in at the present time.

Ticketmaster, he said, is “dead money” thanks to its ongoing legal issues because of subsidiary reseller TicketsNow and the hurdles still in the way of its proposed merger with Live Nation.

“Even though value investor David Einhorn of Greenlight Capital owns 2.5 million shares of Ticketmaster, and its stock is down 81 percent, I’m not convinced,” Ashworth wrote. “I believe the legal troubles over its ticket-reselling division as well as the many hurdles it faces with its proposed merger with concert promoter Live Nation make this dead money for some time.”

As for IAC, Ashworth cited Investopedia’s James Brumley piece in March that called IAC stock “seriously undervalued, holding $1.87 billion in cash and near-cash securities with a market cap of just $2.1 billion.”

Ashworth adds that “since then, it has increased by $200 million, but still provides a nice cushion on the downside.”

In conclusion, Ashworth writes, “Doing a spinoff in 2008 turned out to be a mistake. If it had happened two years earlier, things might have been different. Now IAC/Interactive shareholders won’t know for at least a year or two if this was a wise move. For those looking for stock picks, I’d consider IAC/Interactive as well as Interval Leisure Group … the other three present too many question marks.”