Apr 29, 2013, 7:46 PM ETFireside Chat, Interview, Conference Presentation

A Conversation with Barry Diller

Diller rejects the label of "disruptor" for his own business strategy, stating he does not plan to disrupt but rather pursues what he personally finds interesting in a "wide path" of mainstream viability.
He advocates for ignoring industry "conclusions" and "morning lines" that predict failure, citing his early success in creating original movies for television despite widespread skepticism.
Diller believes the internet is a "radical revolution" currently in its early generations, capable of fundamentally changing almost every sector except those requiring physical animation.
He identifies a recurring pattern where established incumbents resist change to protect profitable "closed systems," often leading to their eventual decline unless they innovate.
Diller views the primary value of the internet as the ability to remove intermediaries, passing costs and fees directly to consumers or creators rather than middlemen.

Aereo: Diller defends Aereo as a legal platform using consumer-owned antennas to stream broadcast signals over the internet for $8/month, aiming to break the $100–$150 monthly cable bundle.
- He asserts Aereo has won in both district court and the Court of Appeals, though broadcasters are lobbying Congress to override the ruling.
- He rejects the broadcasters' threat to move to cable, calling it a bluff that would destroy their most profitable asset: local owned-and-operated stations.
Cable and Satellite: Diller predicts the current bundled cable/satellite model is "unwieldy" and will inevitably be replaced by open, a la carte internet distribution.
- He notes that sports programming costs are rising because cable has no viable alternative, but internet competition will eventually disrupt this pricing power.
Newspapers: He forecasts a shift away from the term "newspaper" toward "information distribution systems," with print remaining for a while but declining rapidly among users under 30.
- He predicts the New York Times will become increasingly profitable by monetizing its premium content, overturning the early internet myth that all online content must be free.
- He characterizes The Daily Beast (17 million unique visitors/month) as a successful non-commodity, niche product that can thrive without print.

Newsweek Acquisition: Diller admits buying Newsweek was a "stupid" mistake, costing $40 million in losses because the company failed to account for the collapse of the legacy print display advertising market.
- They attempted to sell 1,500 ads in a hybrid model but only sold 600, failing to achieve the projected break-even point.
Facebook: Diller does not view Facebook as a "fundamental" entity comparable to Amazon, Apple, or Google, distinguishing it as a social connectivity tool rather than a platform for commerce or search.
- He predicts Facebook will survive for sharing photos and news but lacks the cultural shift power of fundamental tech arenas.
Yahoo: He describes Yahoo as being trapped in the "lousy" display advertising business due to a lack of pricing power, though he sees potential for a comeback through the consistent introduction of unique new products.
Microsoft: He attributes Microsoft's recent struggles to the inability of large incumbents to innovate in key areas like the internet and mobile, though their deep pockets allow them to compete by acquiring or imitating successful products later.
Best Buy: He suggests the retailer can only survive by building unique consumer relationships and leveraging services like "Geek Squad" to differentiate from the superior pricing and convenience of internet retailing.

Netflix: Diller praises Netflix's strategy of investing heavily in original content (citing House of Cards) and maintaining a low-cost subscription model that supports an open, a la carte future.
HBO: He advises HBO to untether its streaming service (HBO Go) from the cable bundle to compete directly as a standalone internet product.
Movie Theaters vs. Newspapers: Diller predicts movie theaters are "everlasting" due to the irreplaceable community experience, whereas the newspaper industry faces a true, accelerating decline.
Music Industry: He argues the music business is rebuilding its revenue through streaming services (Pandora, Spotify) after being disrupted by the internet, though sales volumes remain lower than the CD era.
Telepresence: He dismisses fears that virtual communication will make travel irrelevant, asserting that the human desire to travel is "in our DNA" and was resilient even after the 9/11 attacks.

Rupert Murdoch: Diller cites Murdoch as the premier media leader for his unique ability to take massive risks and bet the company on new concepts without being stifled by bureaucracy.
Jeff Zucker: He expresses optimism for CNN's future under Zucker's leadership, citing his broadcaster background, theatricality, and energy.
John Malone: He calls Malone "the father of cable," crediting him with financing almost every cable programming venture from the mid-1970s to the 1980s.
Jack Welch: Diller considers Welch possibly the "best chief executive officer of a large enterprise ever" due to his relentless energy and management policies.
Tina Brown: He describes her simply as a "great editor."
Mindy Grossman: He praises her as a great retailer who successfully transformed HSN into a powerhouse despite lacking prior on-air TV experience.

New York vs. Los Angeles: Diller views New York as the "capital of the world" and the most stimulating business hub, while characterizing Los Angeles as a "working town" focused specifically on entertainment production.
Tech Talent Shift: He notes that the assumption that all technical talent resides in Silicon Valley is false, with major tech companies like Google and AOL establishing significant technical presences in New York.
Travel Industry: He highlights Expedia as a nearly "pure technology company" that successfully navigated the 9/11 crisis by adhering to the principle that "if there's life, there's travel."
Expedition Scale: Diller notes that the Asian internet market is now as large as the rest of the world combined, representing a massive growth opportunity for travel services.