IAC reported first quarter earnings this morning, and broke out the financials of what the new IAC would like after the pending five-way breakup of the company is completed. (A March court victory against dissenting shareholder Liberty Media clears the way for the spin offs). What’s clear from the financial statements is that the new IAC very much owes its 22 percent jump in revenues and 15 percent jump in operating income to the $3.5 billion, five-year deal it struck with Google last fall to hand over all search advertising on Ask.com and other sites to the search overlord.

In the Media & Advertising division—the new IAC’ largest and most profitable unit which includes Ask.com, Citysearch, and Evite—revenues increased 28 percent to $216 million and operating income skyrocketed 192 percent to $31 million. This was largely due to better revenues per search query due to the Google relationship, and a slashing of marketing costs. (Those annoying and expensive TV commercials finally got canned). Ask has been able to hang on to iits No. 5 spot in search market share (4.7 percent in March, according to comScore) and showed the biggest percentage gain (12 percent) in search queries of any search engine

These numbers show the benefits, at least in the short term, of handing your search advertising over to Google—something Yahoo is learning itself through its limited test with Google to do the same thing. The question is what happens in the long term when market share erodes and Google does not have to pay so much for the privilege of taking away the search advertising business from its fading competitors.

IAC’s other businesses did not do so well on their own. Match.com saw a 10 percent jump in revenues, but a 13 percent decline in operating profits. And the other businesses are just a mish-mash of underperforming assets.

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Barry Diller won a court battle today against Liberty Media’s John Malone. Now Diller can finally go ahead with his plan to break up InterActive Corp. into five pieces—HSN, Ticketmaster, Lending Tree, Interval International, and the new IAC (Ask.com, Bloglines, Citysearch, Evite, iWon, Match.com, BustedTees, Vimeo, GarageGames, and CollegeHumor). Malone, IAC’s largest shareholder, was trying to prevent the spin-offs from happening.

Whether the financial maneuver will “unlock” any value for shareholders remains to be seen. (I’d be surprised if it did). But there is no doubt that IAC is an unwieldy, multi-headed beast whose collection of disparate businesses never really had much to do with one another. As I reported last November:

Diller will continue as CEO and chairman of IAC, which still remains somewhat of a grab bag of about 30 Websites. But at least those businesses are starting to finally be able to stand on their own feet. It doesn’t make much sense for them to be weighed down by Lending Tree because of the mortgage credit crisis or overshadowed by the Home Shopping Network. IAC’s holding company model gave shelter to its startups with the earnings of its more established operations, but any troubles in the larger businesses are difficult for the smaller ones to overcome no matter how fast they are growing.

The problem, as came out during the trial, is that those underlying Web businesses are not growing as fast as Diller had hoped either. Ask.com failed to reach its goal of doubling its market share of search, and Ticketmaster missed out on the growth of the secondary ticket market and recently had to buy TicketsNow for $265 million to compete with StubHub (owned by eBay).

Can an independent IAC compete more effectively against Web startups, or is it just a collection of Web 1.0 dogs?

(Photo by JDLasica).

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Rumors last week that Ask, the IAC-owned search engine, was about to cut 100 jobs overestimated the body count. In fact, Ask is trimming 40 jobs, or about 8 percent of its workforce. Newly appointed CEO Jim Safka, who replaced Jim Lanzone, is also going to refocus the brand to go after women in their late 30s and older, who already make up a disproportionate amount of Ask’s users (65 percent).

No word on what will happen to Ask’s Teoma search technology (the rumor was that Google would be replacing it, since it already handles Ask’s search advertising). Safka is obviously taking more of a marketing than a technology approach. But without improving actual search results (with technology), Ask is going to have a tough time maintaining its 4.5 percent market share. Ask’s search sites collectively brought in 41 million unique U.S. visitors in January, which was up from December and November, but still below October’s 44 million, according to comScore.

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While Google dominates the top slot in search both in the U.S. and worldwide, with a global search market share of 62 percent, there is still a lot of elbowing going on below, especially when you look beyond the U.S.

In a comScore ranking of the top-10 global search engines as measured by number of searches during the month of December, 2007, Yahoo comes in at a distant No. 2 with only 13 percent of global share. (Although, in the U.S., Yahoo actually gained a half-point of share in December, whereas Google dipped 0.2 percent). The big surprise, though, is the strength of local search engines in countries that don’t use the Roman alphabet. No. 3 on the list is not Microsoft, but Chinese search engine Baidu (with 5 percent share, versus Microsoft’s 3 percent). No. 5 is Korea’s NHN Corporation, which operates the Naver portal and search engine. Creeping up on Ask’s No. 8 spot, is Russian search engine Yandex. And Alibaba (which may include Yahoo China) brings up the rear at No. 10.

Shouldn’t the best search technology win no matter what the language? These market share figures suggest that culture and marketing play a big role as well—unless, of course, you are Google.

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Just in time for the Super Bowl and ahead of IAC’s breakup, Ticketmaster has struck a deal to acquire online ticket scalper TicketsNow for $265 million. This follows eBay’s acquisition of StubHub for $310 million last year. TicketsNow is the second-largest online ticket scalper after StubHub, having sold $200 million worth of tickets in 2006. Sources tell us Ticketmaster first looked at RazorGator for about the same price, but that deal fell through during due diligence because of concerns about RazorGator’s accounting. The $265 million paid for TicketsNow, we are told by another knowledgeable industry source, is 35 times EBITDA and about 5X revenues (of $60 million).

Many of the tickets that scalpers, er, brokers, sell on these secondary marketplaces are initially purchased from the Ticketmasters of the world. So the markup is a missed opportunity for Ticketmaster, whose own TicketExchange has shown lackluster performance.

The TicketsNow deal shows how hot the secondary event ticket market is becoming, and Ticketmaster’s entry will likely help legitimize the sector (see our previous coverage on some of the problems with the industry).

The WSJ, which broke the story, reports (subscription required):

Ticketmaster President and Chief Executive Sean Moriarty said the company plans to share revenue from its new division with clients that own venues or promote events, although he said details on how the money would be distributed aren’t final. He said the move highlights a shift in the way ticket resellers are perceived, both by the public and by concert-industry participants. Where resellers once were viewed as shady scalpers, now, thanks largely to the Internet, they are becoming more respectable.

“Clients who five years ago were not willing to allow a ticket to be resold now want a piece of it,” Mr. Moriarty said. The size of the secondary ticket market is hard to judge, but estimates range from $2.5 billion to $5 billion a year in the U.S.

That’s a nice growth market for a business that is about to be spun off as its own stock.

According to comScore, TicketsNow had 1.5 million unique visitors in December, about the same it did a year ago, while StubHub attracted 3.4 million and has been growing nicely under eBay’s wing (although it took a major hit in November).

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In late October we reported on well placed rumors that IAC was in talks to acquire movie-centered social network Flixster. Those discussions reportedly stalled, likely over IAC’s preferred deal structure (partial buyout with an option for the rest) and/or Flixster’s declining traffic and visitor count.

Now perhaps, those discussions are back on track. One source says the deal is done. Another says the parties have been in serious discussions over the last couple of weeks and are “very close,” but no deal has been closed. Both agree the price is over the $150 million being discussed last year, and may be as high as $200 million or more. The deal is being structured as a cash plus earnout transaction.

Flixster had an up and down year in 2007. They started off strong (”growing like a weed“) and have grown to 43 million user home pages. Traffic grew to 12 million unique worldwide visitors and 358 million page views in May. But it has fallen since then. In November, Flixster had just 8.2 million visitors and 139 million page views (source: Comscore). Over 1.2 billion movie reviews have been written by users.

Those declining visitor and page view numbers don’t seem to be a concern to IAC, according to our sources. They just like the company and its loyal users.

Flixster, based in San Francisco, raised $2 million in funding in February 2007 from Lightspeed Ventures and a number of angel investors.

I’m expecting to hear more news in the next couple of weeks. With the current information we’ve received, I put a over-under on a deal getting done with IAC at about 66%.

Flixster

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Liberty Media has acquired a controlling stake in online retailer and fitness website Bodybuilding.com for $100 Million.

Bodybuilding.com sells a broad range of fitness supplements, clothing and supplies as well as offering general fitness articles and a social networking service where over 100,000 users swap exercise goals or post pictures.

According to comScore, Bodybuilding.com had around 2 million unique visitors in November, and according to Liberty sales are expected to top $100 million in 2008.

It’s an interesting move by Liberty Media given they are better known for their investments in other holding companies, most notably IAC/ Interactive Corp.

Wall Street Journal reports that Liberty Media acquired the stake from the site’s founding family and Milestone Partners and that the deal is expected to be formally announced today.

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IAC got serious about its Ask property this year, investing $100 million in the United States alone on a bizarre “Ask the Algorithm” campaign that even sunk to the depths of using the Unabomber as a marketing tool. Unfortunately for good taste there’s nothing like a bit controversy to draw attention to a service and Ask’s traffic was up this year, proving once again perhaps there really is no such thing as bad publicity.

Direct traffic on Ask.com grew from 29.8 million unique visitors in November 2006 to 46 million in November 2007 after dropping to 24.4 million in February for an impressive 54% growth rate.

Ask subsites saw some amazing growth rates, but mostly off very low bases. The Algorithm has a growing market in Europe, with Ask Spain experiencing 2062% growth rate, Ask Germany at 3006% and Ask France with 606%.

Some humble pie from me: back in May I slammed Ask.com for its advertising campaign suggesting that it was too clever by half; I haven’t changed my dislike of a campaign that suggested that “The Algorithm constantly finds Jesus” but the numbers don’t lie: it worked and worked well. Congrats and Christmas well wishes to the team at Ask; you’ve still got a long way to go to catch up to Google, Yahoo and Microsoft but at least you’re heading in the right direction, and competition is always a good thing.

Ask’s full numbers below:

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Jakob Lodwick, the co-founder of IAC owned video site Vimeo, left the company today. The reason? Apparently Lodwick didn’t see eye to eye with the IAC brass on creative issues, and specifically had a run in with IAC chief Barry Diller three weeks ago.

That’s not surprising, given the picture Lodwick chose to include with his goodbye post. A source close to Lodwick says “he was let go.”

Lodwick’s girlfriend, Julia Allison (who made a scandal at our August Capital party last summer - see video here), wrote a blog post saying “Dear Jakob, I wish I hadn’t found out you left the company you’ve been with for the last seven years from your blog. Love, Julia.”

Lots of drama out in NYC this evening.

Vimeo

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IAC is planning on spending $100 million on new ventures in China and is also looking to launch a Chinese version of Ask.com

According to the Wall Street Journal, IAC CEO Barry Diller said the new push into China would involve something that is “unique” and does not compete directly with existing players. The IAC owned travel site eLong has not be doing well in China, with Diller saying that “We bought eLong and promptly screwed it up.”

Diller said that online gambling was one area that IAC would consider in China. The China focused version of Ask.com will be available “within 2 years.”

Asked about the cultural difficulties of operating in China, Diller gave the WSJ a response that is bound to upset a number of TechCrunch readers in the United States, but certainly shows respect and recognition that American law is not supreme throughout the globe and that business is bound to follow the laws of the nations they operate in, even when they don’t like those laws: “Every place has got its constraints..It doesn’t bother me … When you operate in a country you play by the country’s rules.“

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