Ladies and gentlemen, thank you for standing by. And welcome to the IAC quarter one earnings conference call. During today’s presentation all parties will be in a listen-only mode. Following the presentation the conference will be opened for questions. (Operator Instructions). This conference is being recorded today, Wednesday, April 30, 2008. I would now like to turn the conference over to Mr. Tom McInerney, Executive Vice President and CFO. Please go ahead.

Thanks operator and thank you everyone for joining us today. On the call with me today is our chairman and CEO Barry Diller. During this call we may discuss our outlook for future performance. These forward-looking statements typically are preceded by words such as we expect, we believe, we anticipate or similar statements. These forward-looking statements are subject to risks and uncertainties and our actual results could differ materially from the views expressed today. Some of these risks have been set forth in our Q1 2008 press release and our periodic reports filed with the SEC. We will also discuss certain non-GAAP measures. I refer you to our press release and the investor relations section of our website for all comparable GAAP measures and full reconciliations. Through the results the consolidated figures are laid out in the release and reflect some very positive developments and some challenges. But as we continue our planning for the spins it really makes sense to discuss each of the five companies separately. At retailing, HSN grew revenue 9% excluding America’s Store. But while we got good top-line growth, total HSN operating income before amortization was essentially flat. We had 140 basis point decline in gross profit margins resulting from a shift in product makes to electronics and cookware which are typically lower margin items and continued pressure on net shipping and handling revenue as costs continue to rise which we can not pass on to the customer in this environment. One of HSNs strengths is the diversity and depth of its product assortment which allows it to shift products to meet demand in difficult retailing environments. And this quarter is an example of that. The market for jewelry, apparel and most soft home product is very challenging right now. So we’ve moved airtime to…

Thank you Tom. Good morning everyone. Litigation with Liberty that has distracted us for so much of the quarter was resolved by the court in our favor. What this means for us are primarily two things. First there is now no uncertainty either for IAC or for Expedia as to the clarity of the proxy that I hold to both controlling shares in each company. I know that this has been the subject of speculation and instability both inside our company and throughout the investment community and while I would’ve preferred that the questioning of it had never been raised and that we would not have had to go through wasteful litigation to get there, I’m at least glad that one overhanging negative has been so definitively swept away. And second we intend to proceed with the spins. Our board met Monday and furthered the step-by-step process that we hope will result in filing with the SEC in May and with the spin-offs completed in August. We’ve had discussions with our board about the mechanics of how these companies will work and we expect to make those specifics known as soon as we are able to. What we’re not discussing is the possibility of a so-called swap transaction with Liberty. While the potential for such a deal just by the nature of our relationship, I think it’s very unlikely that one will occur. I’ve learned many things these last months, the most important of which is how right we were to recommend splitting IAC into five separate public companies. And this quarter’s results only further that conviction. For instance, if I really wanted to give you more than a superficial state of this union of 60 plus businesses, it would take far more than today. And in of course the moment of the time — of time there would always be something negative somewhere that would overshadow the positives. Once spun, each of these companies will have your proper time and attention to dig under the hood and really understand their prospects and challenges. As we move towards the spin we’re planning multiple sessions with investors and analysts to fully put forth the managements of these companies and their plans for each of the entities. In the meantime the best way to use our time today is to get to the answering of questions of interest to all of you. So with that let’s do questions.

At this time we will conduct the question and answer session. (Operator Instructions) Our first question comes from the line of Jeetil Patel with Deutsche Bank Securities. Please go ahead. Jeetil Patel — Deutsche Bank Securities: Great, thank you. Two questions. Tom I guess you talked about HSN doing pretty well, up 9%. Can you talk about whether you’re gaining share from other players out there or is it just a function of your customer spending going higher or you’re attracting more traffic or more calls coming in from new customers. And then second as you look at the Ticketmaster business, are you in position today with a lot of the investments initiatives you’ve had underway over the last couple of quarters to offset the Live Nation revenue and OIBA for ’09 at this point? Or do you think there’s still a lot more work to be done to try to compensate for that impact as you look into the out year?

Yes, Jeetil, I’m HSN. Obviously our largest competitor in the direct space has not reported yet. But as you look across the broad swath of retailers I think there’s no question we’re doing very well indeed. The specialty of apparels for the quarter are down 3%. Same to our department stores, perhaps the closest comparable in the broad retailing I think it was down 8%. So even if you adjust for some of our mix just to kind of conservatively interpret the numbers there’s no question we did better. We’re investing incremental — not huge sums — but incremental dollars. And it’s one of the things that affects the bottom-line margin in service. We just moved all of our service back onshore. For example we had a multi-effort to try and make it work offshore. We’re putting that back to customer. And we’re seeing positive trends in the customer data. Customer counts are up, customer engagement is good, feedback is good and so the fundamentals of the business are quite valid indeed in this environment. It just — in this environment it does not add up to as much as you’d like. Jeetil Patel — Deutsche Bank Securities: So offline moving to on air?

Yes. I mean online is good. HSN and online now is nearly 30% and HSN.com was up over 20% in the quarter. So good — continued good traction there. On Ticketmaster we’ll provide more specifics when we get closer to the spin. But we’re kind of well on our way. I think your question was are we there or is there still a long way to go. And I’ll say there’s — I do not think there’s a long way to go. How the numbers exactly add up for ’09 in terms of have these acquisitions come through and the investments and other things we’re doing, we’re going through that planning process now. But I can say categorically we’re certainly not a long way away. Maybe not any way away but that’ll be in the adding over the next several weeks to replacing the profit from that business. Jeetil Patel — Deutsche Bank Securities: And do you think that the makeup for that will come in the form of a secondary business or will it come from Paciolan and TicketsNow primarily to look at —

I think it’s all of the above. I mean TicketsNow is a secondary player obviously. Paciolan helps, those were the two big acquisitions we did. And a lot of the investment we’ve been making through the last several years including internationally. So it’s all contributing.

Operator thank you, next question.

Thank you. Our next question comes from the line of Jennifer Watson with Goldman Sachs. Please go ahead. Pardon me, the line of Jennifer Watson is available to ask a question. Jennifer Watson — Goldman Sachs: Great, thank you. Can you discuss where you think Ticketmaster margins stabilize over the longer term and what factors are at play in terms of pushing them higher versus lower? And then also just I have another question on lending.

Yes, I think it’s hard to say Jennifer right now. I do not think we have a target yet on Ticketmaster’s margins because I think it really depends on this revenue mix shift. We’ve got more revenue now coming from the secondary market and that part of the business even adjusting, even kind of proforming for the acquisitions is growing faster. That’s a lower margin business right now at TicketsNow plus our own efforts. Some of the emerging international markets of the lower margin business were getting higher revenue. So I do not know there is a target. I do know that if you look at kind of this very large margin percentage contraction we had in Q1, only about a quarter of it is what I would kind of characterize as kind of core margin pressure in the Ticketmaster business, rebates or other cost escalations. And historically we’ve been more than able to offset that just through volume and leverage growth. Kind of three quarters of that are these investment dollars, either acquisitions at lower margins or other spending that’s going to replace this business. And I think as we get into next year that will even out and we’ll be getting very high revenue growth at some continued margin contraction or not at all.

Next question please.

Thank you. Our next question comes from the line of Justin Post with Merrill Lynch. Please go ahead. Justin Post — Merrill Lynch: Yes, a couple questions. First one for Barry. Could you talk about the private equity interest in the individual companies? Are people wanting to maybe invest in some of these things? I know you won’t say anything specific, but how’s the landscape? And then secondly, maybe for Tom, we calculated proprietary revenues up close to 40% for Ask. I guess first how do you plan to address the queries down your — or do you think you can change that around? And can you quantify what percent was from Google or what percent was from your own initiatives to drive that modernization improvement?

First relative to private equity. We’ve had lots of discussions. We had lots of people knocking on the door and coming in and talking about different schemes and ideas. The truth is as we go through this I think we’re not probably going to do any of them. I think that the best thing to do is simplicity. We may do one or some modified thing, but I don’t think we’re going to do anything that will particularly engage private equity world. The best thing is to get these companies spun out and to get them in the public market, get their managements out there, so to speak, and taking care of their businesses and talking to the investment community. I think that’s probably the better step forward for us at this point. The one thing — sorry, I won’t even go any further with that.

Okay. Let me take the second part of the question in terms of the media and advertising results. First of all, on the query side, you know, it’s easy to drive queries in this business through various online marketing techniques, and the real key is driving loyal users, retained users, those that will come back that you don’t have to pay for day in and day out. So queries were down, you know, very modestly in Ask as we called out in the release, but as we look at the data, you know, core users were up. Retention is up. Frequency is up, and so kind of the fundamental health of that user base that really uses Ask as opposed to the ones we were driving through marketing because marketing was down substantially in the quarter. And really what we’ve done, just to take a step back, is looked at the entirety of the business with new management, as we have a new team in there, and really focusing on, you know, driving profit, driving that loyal user base that will position us for, you know, long-term success, so we’re not kind of the slightest bit troubled by that.

You know, the most significant fact — and you mentioned it, Tom — but the truth is we spent a fortune in advertising last year. And we know that when you put the marketing dollars out, spikes go up and get a lot more queries. The issue is retention. The issue is as Tom referred to it. But the contrast between what we’ve spent this year and what was spent last year is just quite large, and the other thing is that the new management, not to denigrate the old management at all, but the new management is so focused and tasked to meeting very clear direct objectives that are wonderfully chopped up and boxed out in very theatrical ways by the leader Jim Safka to energize everybody to meet specific goals. It’s just an entirely different operation than it was last year. Justin Post — Merrill Lynch: Thank you.

Next question?

Thank you. Our next question comes from the line of Mark Mahaney with Citi. Please go ahead. Mark Mahaney — Citigroup: Great, thanks. Tom, you provided a very useful peel-back of the margin pressures in Ticketmaster. Could you do the same thing to HSN? Those were pretty low gross margins. What percentage of that do you think were kind of near-term cyclical, economic, simple mix shift and what percentage of that could be actually structural, just a change in online retailing in terms of shipping or free shipping requirements? And then secondly, those media and advertising margins looked at a very strong positive. Is that sustainable going forwards? Given the old history of that company, they should be. But are there any — is there anything one time-ish in there or is that sustainable? Thank you.

On HSN, you know, it’s a little hard to bifurcate with precision obviously, Mark, but I would say roughly kind of three-quarters, one-quarter. It’s mostly mix, which is a very proactive reaction to where we see the consumer buying. It’s not something we’d plot or plan or design, but it is one of the strengths of the business that you can react quickly. You don’t have product on shelves, and you can kind of adjust accordingly. The only thing in the gross margin — and we’ve talked about this before — that we do still see, and I don’t know if I’d call it structural. It may be cyclical, but we don’t have kind of a — it’s not a near-term answer — is we do see cost escalation in the shipping side because of competitive fractures, which is really the large number of web retailers out there that you really can’t pass onto the customer. and I think that’s, you know, it varies, but call it 30, 40, 50 basis points And over the long-term if you have a healthy economy and you have a healthy growing business, you should be able to mitigate that one way or the other. In an unhealthy environment, you know, there’s really no mitigation possible. To the media and advertising question, yes, you know, we called this out. It’s a combination of multiple factors. One is because of the new arrangements with our sponsored listings partner, a marked shift towards the proprietary side of the business away from the network side of the business. And so we do expect continued substantial margin increases for the balance of the year in that media and advertising business. The other thing is, as Barry alluded to, you know, we’ve managed costs pretty aggressively. We’ve pulled back on unproductive marketing, and that’s a contributor as well, so it’s a healthy financial outlook and picture there. Mark Mahaney — Citigroup: Thank you, Tom

Thank you.

Oh, sorry. Next question.

Sorry about that. Our next question comes from the line of Doug Amnuth with Lehman Brothers. Please go ahead. Doug Amnuth — Lehman Brothers: Thanks for taking my question. Just a couple of things on lending, and the first one just a clarification. It looks like you did basically a comparable dollar amount of total closings versus 1Q last year on basically half the number of closing units. Can you clarify that? And secondly, are you still just as committed to the loan origination business at Lending Tree? Thank you.

Doug, just can you rephrase the first part of that? I’m not sure I got it. Doug Amnuth — Lehman Brothers: Well, it looks like the total dollars that you closed 1Q this year versus 1Q last year were pretty comparable, but the actual number of closings is basically half the number of units versus last year?

Let me check on that. Let me answer the second part of your question first. You know, what we’ve done on the origination side of the business is, yes, we’re still committed to it, but we’ve very much adjusted to the current market environment, and so we’ve scaled down the operation, taken a lot of cost out of it. We’ve also set it so that it’s operating at a very consistent volume level. One of the things that hurt us in the prior environment were volume levels going up and down at any given month, which meant you either too many people or too few people. And so it led to kind of real profit pressures in that business. So I think it is an important part of the business. We think it’ll provide real upside when this market comes back, and it is a when, not an if. And in the meantime, you know, it contributes a little bit. I’ll come back and answer your earlier question later. Doug Amnuth — Lehman Brothers: Okay. Great. Thank you.

Next question, please.

(Operator Instructions) Our next question comes from the line of Brian Pitz with Bank of America. Please go ahead. Brian Pitz — Bank of America: Thank you. Two questions. Broadly would you comment on the overall online ad rates in terms of CPMs and CPCs in the quarter? And then should we expect Q1 levels of marketing spend to continue at Ask, and basically can you sustain growth without that really hurting market share? Thanks.

Yes. You know, as we look across our businesses, it’s property by property, but I’d say both as a buyer and seller we see it in certain categories. Lending’s display rate, the properties they’re buying into, have absolutely come down. That’s not a surprise. At the same time, here’s the selling example. Evite is up. They just took an increase, and that’s being passed through. So I think it very much depends on the category. We are seeing in our sales operation I guess I’ll call it slower decision making, a little bit harder to convert the pipeline, and so there are some sell-through pressures, but it’s not so much in price. It’s just a little bit in terms of slowness to react. On the media and advertising marketing question, I think, you know, the plan for the year right now generally, and obviously we’ll kind of read it and react, but it’s generally to spend at kind of comparable levels to what we did in Q1. It’ll bounce around.

Yes, we’re not going to materially increase the marketing.

Yes.

We’ve got so much work to do in Ask to refine the product and refine it, by that I mean to really point our foot at a much more assured way of growth, and that does not particularly involve marketing. So I don’t think we’re going to see it in the near term. I think at some point we should see increased marketing but not for some time. We’ve got several quarters yet to go through before I think we’d get to a place where we think sensible marketing where you can retain the query, retain the unique, retain the person, to put it in metric terms, is the thing that we’re after for the future. Brian Pitz — Bank of America: Great. Thank you.

Next question, please.

Thank you. Our next question comes from the line of Jeffrey Lindsay with Sanford Bernstein. Please go ahead. Jeffrey Lindsay — Sanford Bernstein: Hello. We were just wondering if you could give us any updates on the spinout process at what stage you’re at, what has happened and what has to happen just in very high-level terms, and what if anything we might expect to see from the outside so we can understand how things are progressing. And then could you give us any sort of details on the principles by which the debt cache and operating expenses will be allocated to the new businesses and how much of this has already been agreed. Thank you.

As I said earlier, the spins, we are proceeding. We had a board meeting, as I mentioned earlier, which was a step in the stations of the movement here that we have to go through. And I would think that we’re going to have probably one or two more board-level discussions about this. We have a filing in I think it’s May we hope. And we really are just in the process. It’s a massive effort mostly — I mean it’s a massive detailed effort to get these filings together to do all of the things that we have to do. All of them are procedural. We don’t anticipate anything that would slow us down. If we get comments from the FDC, that may take a little while, whatever. But it’s a normal process, and we think that we believe we’ll get this done in the third quarter, so hopefully the early part.

And to the second part of the question in terms of capital structure. You know, we’ve spent a lot of time on that, and we continue. Obviously the credit markets and capital markets generally are very dynamic, and so we don’t have specifics yet to announce and probably won’t for, you know, several weeks to a month plus. Those details will probably not be in the initial filing. But the principle, which I think you asked about, on the capital structure side is, you know, we’re going through for each of the four businesses plus new IZ and spending a lot of time saying what is the appropriate capital structure for this entity in this capital market. And so for the mature businesses that has one general direction for the earlier stage businesses, another. And, you know, the reality is we have the luxury of not having a substantially leveraged structure to begin with, so we have flexibility here, and we think we’ll end up with appropriate capital structures kind of times five. And then the last part of your question I think was on operating expenses, and I take from that kind of corporate and public company expenses and we’re working through detailed plans, again, at all five companies on that. There will obviously be some modest incremental public company expenses at the four companies, and there will be materially reduced corporate and public company expenses at IAC. And we certainly don’t expect the total of that, the net four up and the one down, to be more than we have now. And if it can be less, we’ll accomplish that.

Yes, we think — I think it will be less, and it certainly will be vastly less at corporate, corporate beyond simply public company issues, just the whole corporate apparatus that is responsible for a great swath of companies is obviously going to have much more limited responsibilities.

Let me just while I have the mic I want to answer Doug’s question because I looked at the data. On LendingTree, the difference in the metrics between closings and dollars is simply that we exited the home equity business at LTL. There were a lot of units there and not a lot of dollars, so that’s why that was divergent.

Next question, please.

Thank you. Our next question comes from the line of Imran Kahn with J.P. Morgan. Please go ahead. Bridget Wysha — J.P. Morgan: Hi. This is Bridget Wysha calling in for Imran. Quick question about HSN. I know that you said that sales of jewelry and apparel were weaker than electronics. Can you tell us how inventory levels are in those product lines? And also could you explain why your return rate jumped up to about 19.1% from 18.4% last quarter? Thank you.

Yes, you know, at HSN I think perhaps a bit — more than a bit — certainly experienced and educated, all of us having suffered through last year, we’ve done a pretty good job on inventories. There’s always little pockets here and there, but inventories are down materially from Q1 levels a year ago, and so we generally feel fine about inventory levels there. On the return rate, you know, we’ve seen this trend for some period of time, and we don’t have a good answer on it. Certainly we’ve done some things on the service side that have made it easier for customers return. That’s the good customer service preprinted return labels and the like. But I think there’s a again — and this may be kind of macro and longer term with the proliferation of web retailers and people’s comfort with having things shipped to their house. I think more and more people are willing to try something and send it back if it’s not exactly what they wanted. We certainly don’t see anything in the data, the complaints, the surveys or whatever, that says there’s any kind of structural problem, service problem. In fact it’s the reverse. We think customers are increasingly happy with our service. It’s just kind of the trend of customer behavior there, and it has been for awhile.

Next question, please.

Thank you. Our next question comes from the line of Aaron Kessler with Piper Jaffrey. Please go ahead. Aaron Kessler — Piper Jaffrey: Just a couple questions. First on the Ask business, can you give us a sense maybe what domestic growth versus international growth was and any verticals that were strong or weak in the quarter? And also your comparison shopping business Pronto seems to be getting some deepened share. Any sense for maybe how that’s added in the quarter or the growth rate and also how are you driving traffic? Is it organic or is it kind of SDO and kind of SDM that you’re using to drive traffic for Pronto? Thank you.

Yes. On the first question, we’re getting good growth, both domestically and internationally both in the U.S. and the U.K. I think that we’re getting higher quality growth and more proprietary growth on the domestic side of the business. RPQ up substantially and modernization up substantially across the domestic business even aside from the new sponsored listings arrangement. So I think in terms of what translates to the bottom line, it’s definitely skewed toward the U.S. U.K. and other markets continue to be challenging for us. Pronto drives most of its traffic via search engine marketing, not unlike other comparison shopping engines. There is a slug, an increasing slug, of users who are direct domain and come in, but that business has gotten to scale. It’s about a breakeven now on an increasing revenue base. And you know, we have as a real business and now our goal is obviously to extract, you know, profit and cash from it, but it’s a great service, continues to grow at very healthy rates and should make money for us soon. Aaron Kessler — Piper Jaffrey: Great and do you have any ballpark estimates on the G&A when you split up these — when you do a spinoff how much extra G&A you would incur on the spinoffs or it’s too hard to say at this point?

Well, I think, you know, it’s probably $5 to $7 million per each of the four companies. Take the lower end of the range for the smaller companies and the higher end of the range for the bigger of the four. And you know, as we said earlier, that times $4, $28, $30 plus million will come out of the corporate that remains with new IAC. Aaron Kessler — Piper Jaffrey: Great. Thank you.

Thank you. Next question, please.

Thank you. Our next question comes from the line of Ross Sandler with RBC. Please go ahead. Ross Sandler — RBC : Thanks, guys. Just a couple of questions on the media and advertising segment. If I look back at prior quarters, the trended financial table, I think there may have been a bit of a restatement of the percentages between network and proprietary. Did something shift from one or the other? And then I have one follow-up. Thanks.

Let me check on that. I don’t think any major. I think the significant increase in network is because of our new arrangements as I outlined earlier, but either I’ll get the answer or we can follow up offline. I’m not sure which historical quarter you’re looking at.

What’s the follow-up? Ross Sandler — RBC : Okay and then I’m looking at the growth rate between, on the proprietary side went from somewhere in the 20% range for 2007 up to about 40% in 1Q 2008. Is it fair to characterize most of that jump as, you know, the Google renegotiation or is there some mechanic growth in there as well?

No. The media and advertising — and the answer, I just found the answer to your first question. The first question is we included now City Search in that proprietary network split, so it’s a combined media and advertising segment split along those two measurements. You know, the media and advertising revenue is up 28% in the quarter, and more than half of that growth was not related or less than half of the growth was related to that new arrangement, so we’re getting very good growth at City Search. We’re getting good growth at Evite. We’re getting good growth in our Fun Web businesses, in modernization generally. And you know, the trends across the media and advertising segment are very healthy even aside from that arrangement although the arrangement obviously helps us to a great degree.

Next question, please.

Our next question comes from the line of Scott Kessler with Standard & Poor’s Equities. Please go ahead. Scott Kessler — Standard & Poor’s Equities: Hi. Thanks very much. I guess this was kind of detailed earlier, but can you speak to whether or not you would expect any potential additional challenges to the spinoff plan? Obviously, one of the major — the major hurdle — the lawsuit has been resolved. But is there anything out there that we may not be thinking about at this point that, you know, might possibly delay things to any extent? Thanks a lot.

No, we can’t — who ever knows about cataclysmic events? But there’s nothing in our process that appears to us as if it would cause us delays. Scott Kessler — Standard & Poor’s Equities: Okay, great. Thanks a lot.

You’re welcome. I think we’ll do our last question, so let it come.

Thank you. Our last question comes from the line of Heath Terry with Credit Suisse. Please go ahead. Heath Terry — Credit Suisse: Great. On the Match business, I was hoping you could kind of give us a little more depth there in terms of what you’re seeing in that industry or in that category as a whole. Is Match’s flat revenue, should we view that as a share issue or is it just that as more entrants come into the category or is it simply that the category itself isn’t growing?

You know, as best we can tell, it’s largely a category issue. I mean getting precise shared out. Certainly, as we look at the larger players, we don’t see big growth anywhere. I don’t think Yahoo’s growing significantly, e-Harmony, et cetera. It’s a funny business in that your addressable market is quite large, but consumers tend to very much come in and out of the service. A typical customer or user will come to Match; stay for a couple months, maybe two, maybe four. They’re successful or they’re not successful. In either case they leave. Frequently, more than half the time, they come back, and I think the same pattern is true for other competitors. And so a significant percentage of kind of the addressable market use the service in a given period, but getting that stickiness, getting people to make it kind of a perpetual part of that behavior, has not yet happened. And so, you know, if you look at this business over the last I think it’s 11 years now that we’ve been in it, there’s always been this kind of plateaus and the reinvigorated growth as we’ve figured out a way to kind of break through that. We have not yet, as I said earlier, figured out that one as it relates to the domestic market. At the same time, we’re over 30% international and have good growth there, so we have to keep innovating. We’re confident we’ll find that. At the same time, we have the number four brand now as well via Chemistry, so it’s a very solid business, but clearly we need to reinvigorate that core Match business domestically while the other things are doing fine.

No entrant has come in that has changed the, so to speak, leadership or characteristics of leadership. There are lots of new niche entrants that have come in, but certainly nothing’s taken away from Match’s leadership and Match’s introduction of a new site that’s already kind of up there. Well, it puts Match in a very good position for the future, so anyway, thank you. That’s it for this quarter. Hopefully, the next time we are on this call, we will be on this call split five ways.

We’re imminently about to.

Yes, that’s true, Tom. We should not over-promise in that. You never can tell about that. We do think it’ll be sometime he said in the third quarter, hopefully the earliest part. But whatever it is, sometime around that time this will be a divided nation but a stronger one. So thank you all for participating and we’ll talk with you at the next quarterly call.

Ladies and gentlemen, this conference is available for replay. (Operator Instructions) Ladies and gentlemen, that does conclude our conference for today. Thank you for your participation. You may now disconnect.