Deal for About.com Fits Diller\'s Strategy

Barry Diller has a new toy.

With the $300 million purchase of the About Group from The New York Times Company, Mr. Diller's IAC/InterActiveCorp has once again added to its expanding portfolio of Internet and media brands.

The acquisition, in many ways, is classic Diller.

IAC is known for snapping up businesses that generate cash and fit nicely into the existing portfolio of brands. The About Group, owner of About.com, a popular advice site, checks each box here. While group's profit shrank last year after Google tweaked its search algorithm, it still posted $41 million in profit. About.com also complements IAC's Ask.com, a question-and-answers site that it purchased in 2005.

The acquisition also underscores how Mr. Diller's deal-making has shifted over the years. A decade ago, he made headlines for a string billion-dollar Internet acquisitions of growth companies like Expedia and Ask Jeeves, which later became Ask.com

Nowadays, Mr. Diller - wh o relinquished the title of chief executive in 2010 but remains the company's chairman - could be described as more conservative in his ambitions. Since Ask Jeeves, IAC's deals have been more modest in size and largely turnaround stories. About.com, which was initially purchased by the Times Company for roughly $400 million, has struggled to increase user engagement. In 2011, IAC picked up Newsweek, which was hemorrhaging cash, and recently acquired the rest of Meetic, a European dating site, which IAC has described a “turnaround project.”

“Diller doesn't seem to have an appetite for huge deals anymore,” said James Dobson, a Benchmark Company analyst. “The message is, they're not going to spend money frivolously and they are not willing to buy high growth assets. They're looking for assets they can turn around.”

While Mr. Dobson says IAC didn't get the About Group for cheap, he believes the unit will dovetail nicely with the company's strategy for Ask .com. After initially trying to compete with the likes of Google and Microsoft, IAC has gone back to promoting Ask.com as a niche, questions-and-answers search engine, according to the analyst. It has also been spending more on Ask.com marketing, through television ads and billboards, which should increase About.com's sagging numbers once the sites are more interwoven.