Execs face tough digital transition, Diller says

By Kenneth Li

NEW YORK (Reuters) - Big media companies and their executives face a tough transition as they seek growth from new businesses on the Internet, IAC/InterActiveCorp (IACI.O: Quote, Profile, Research, Stock Buzz) Chief Executive Barry Diller said on Monday.

Diller, whose company owns a portfolio of some 60 brands from Match.com to HSN home shopping network to LendingTree.com, is among the first and most high-profile of old media defectors.

His exit from News Corp.'s NWSa.N Fox television and film studios in 1992 was derided by his peers, during a period well documented in the New Yorker magazine.

A new crop of traditional media executives are now on a similar odyssey -- most prominent among them is NBC Television President Randy Falco, who just this month was appointed CEO and chairman of Time Warner Inc.'s (TWX.N: Quote, Profile, Research, Stock Buzz) AOL unit.

"It's a very hard adaptation," Diller said at the third annual Reuters Media Summit in New York, speaking generally about the plight of media executives making such a move. "You get a headache by the first cup of coffee in the morning."

Diller, having spent years atop the media industry as head of Fox and chief of movie studio Paramount in the 1980s, quit in 1992 to take a year-long soul-searching mission, according to the 1993 New Yorker profile by Ken Auletta.

Diller's friend and now wife, Diane von Furstenberg, introduced him to QVC, a 24-hour network that sells merchandise on television, a far cry from the Klieg lights of Hollywood's red-carpet movie premieres.

"All they care about is status," Diller told Auletta at the time, speaking of his former Hollywood peers. "That's why they can't understand why I'm doing this."

Diller had flirted with buying back into traditional media in the past decade, but has since created a vast network of largely Internet-based properties focused on myriad sectors, including online and on-TV retailing and Internet search.

He told the Reuters summit that media companies, which only in the last few years have invested more heavily in Internet businesses, have done a "poor" job.

"They don't do it really well," he said, noting his alma mater, News Corp., was among the few exceptions. "Instead they just try and extend colonialism, media colonialism, into whatever they can."

Media companies "tend to not really get into it, but to see in a sense how it can be exploited from where they've been, rather than to what the opportunities are genuinely."

"It's interesting that none of them play at all in Internet product creation," he added. "All the talk has been about what they're going to buy."

(For more coverage of the Reuters Media Summit, please see our MediaFile blog at blogs.reuters.com/mediafile/)