Welcome to the IAC Q2 earnings conference call. (Operator Instructions) I would now like to turn the conference over to Tom McInerney, Executive Vice President and Chief Financial Officer. Please go ahead, sir. Tom McInerney: Thank you, operator and thank you, everyone for joining us today. During this call, we may discuss our outlook for future performance. These forward-looking statements are typically preceded by words such as, we expect, we believe, we anticipate, or similar statements. Also, you are aware that there are risks and uncertainties associated with these forward-looking statements. Our results can be materially different from the views expressed today. Some of these risks have been set forth in our earnings release filed earlier today with the SEC and our other publicly filed reports. We will also discuss certain non-GAAP measures. I refer you to our press release and the investor relations sections of our website for all comparable GAAP measures and full reconciliations. I will highlight a few items in our financial results before turning it over to Doug and Barry. By now, I'm sure you have all seen our press release with the results clearly laid out so I won't be repetitive, and I will only highlight a few items. While the Q2 consolidated results were not what we had hoped, they were directionally what we expected, with a couple of exceptions. As anticipated, we saw year-over-year profit declines at HSN, LendingTree, excluding an accounting change at BDN Advertising. However, unexpectedly, we also saw a much weaker domestic concert industry and Ticketmaster was comping against a strong year-ago quarter. We continue to see very good results at Interval, Match and Service Magic. Our consolidated results also reflect the completion of our Retailing International sale and the reporting of that operation as a discontinued operation. This cost…

I will begin with operational detail onto the financial results. Beginning with retailing; while we are obviously disappointed with HSN's bottom line and gross margin declines that Tom discussed, top line growth of 3%, excluding America's Store was modestly encouraging. We are focusing on improving our margins and our core merchandise strategy the same as we've discussed previously and we are making progress. We have created a differentiated brand identity, reduced reliance on some older core brands and suppliers and increased the quality of both product and process. During the quarter, our active customer base was relatively flat and declined less than 1%, which is the lowest level of decline since December 2005. We are retaining more of our repeat customers and our moderate to heavy users have increased 3.5%. You are seeing this modest improvement in customer trends because we are executing on the strategy we laid out almost a year ago. The merchandising team has broadened the assortments across all categories and the number of unique items aired during the period increased 10% over the same period last year. The way we attract and retain vendors has fundamentally improved and personalities like Emeril Lagasse and Tori Spelling have introduced new products on air in addition to our existing partners introducing new product lines. The success on HSN continues and has spawned several standouts like Ghost Smile, Dior and T3. HSN.com, under the leadership of William Lynch who joined HSN seven months ago, is showing real progress. Total visits to the site increased 7% in Q2 year-over-year and sales grew at a low double-digit rate. Today we've relaunched the site, incorporating our extraordinary wealth of video content to create a new and truly unique online shopping experience. If you haven't seen it yet, I encourage you to check it…

Good morning, everyone. You've heard from my colleagues about the numbers and the trends for the businesses. This has not been a good quarter and you will not have any defensiveness from me. I do understand that there's no productivity in making upbeat promises for future quarters. They will reveal themselves as they occur. While I do believe our growth is temporarily stalled and that the basics of our business and our strategies are sound, and that under any circumstances that I can foresee, we'll produce plenty of positive cash flow this year; the balance of the call should be to give you the most time for us to answer your questions. I only want to add that while we didn't repurchase any shares during this period, not having done so doesn't change anything. We have been and will continue to be net buyers of our shares over the long term. You should not read into our long-term intentions based upon short-term inactivity. We've brought in a ton of stock over the last years and quarterly activity or non-activity just isn't indicative of much. You won't find us wavering from our policy of not commenting on any aspect of our share repurchases until after the fact and in the official reporting periods, other than continuing to say that (1) we're long-term net buyers, and (2) we purchase stock opportunistically. With that, operator, let's please go to questions.

(Operator Instructions) Your first question comes from Justin Post - Merrill Lynch. Please go ahead.

Tom, can you talk a little bit more about Ticketmaster trends, really the variance in the quarter? If you look at where the quarters laid out, how much of the 2Q sales do you think might have happened in 1Q? Can you quantify that versus last year? Can you give us a growth rate in July? Tom McInerney: Sure, Justin. It is hard to quantify it precisely. As I said earlier, the domestic business is really the weakest external market we have seen since probably Q3 2004. We have had ten straight quarters of uninterrupted favorable environment. We did have a very good March. I think some of the Q2 volume may have pulled into Q1, but I don’t want to overstate it. I think it was just a light quarter, and it is hard to know exactly what that was. We were comping against a very good quarter a year ago. We’ve analyzed it up, down in sideways. They weren’t the same magnitude of big blockbusters, but was also deeper. Some of the sales for summer and outdoor venues were light. So it was really just a domestic volume industry, and was also a mix issue, because as we didn’t have the concert volume, last year we were 64% of our domestic volume was in concerts. This year it was only 58%. So our domestic convenience and processing per ticket was also off. So when the volume is not there, you kind of get the triple whammy: first the loss of ticket obviously, then because it wasn’t there in music you get the negative pricing mix. Then we compounded our own problems by investing very heavily, perhaps inadvisably so in hindsight, hindsight is always 20-20, but operating expenses were up sharply in the quarter notwithstanding some of the one-time items we had in the quarter. All three of those things came together and there is a lot of operating leverage in this business and so, when the volume is not there, and you compound your worries, you get the double whammy. July was solid. We grew year-over-year, it’s early, this is not a backlog business, we have been saying that quarter after quarter for years. So, all we can say is we are guardedly optimistic about Q3 and the rest of the year. We don’t think this was any kind of permanent sea change in the trend line.

With Ticketmaster, it is not a business where you can really look quarterly except if you wanted to hone in on share, because that’s really the relevant factor; share and expenses. Share for the quarter was not affected, and Tom talked about expenses. But given that we are totally dependent on upon selling tickets to concert events during this period -- not totally, but to a large degree – they will come and they will play or they will not play. They are not timing their appearance to our quarterly time periods, reporting periods; awkwardly said. Do you have a follow up?

I guess you are going to give us the July, maybe you could tell us if it is double digits or not? On the balance sheet, we did see loans available for sale really come down quarter over quarter and then the cash was down, maybe you could comment on those two things and I will let someone else ask the questions. Tom McInerney: Loans available for sale is, obviously to some extent, an indication of going forward production and as Doug outlined in his remarks and I did as well, there was no question of rate rise in the beginning part of the quarter continued impact what has been a negative trend line in this business. That obviously only applies to LendingTree Loans, not to be entirety of our LendingTree business and I don’t want to over interpret the data, it’s not a straight line by any extrapolation from that figure to revenue for the business for lots of reasons that are too complicated to get into in this call. But there is no question, the environment has been very difficult and production in our captive brokerage operation is down in response to that environment.

Any cash, net cash down at that quarter-over-quarter? Tom McInerney: Sorry, Justin. Can you just repeat that again?

I think your net cash was down quarter over quarter a couple hundred million. What drove that? Tom McInerney: We made a number of investments. We were free cash flow positive, pretty good considering the seasonality issues I mentioned in terms of free cash flow for the quarter. We did make a number of investments in the quarter that press releases have gone out on and none that are overly major, but I think some of that timing drove that.

Thank you.

Our next question comes from the line of Jeetil Patel - Deutsche Bank Securities.

You had mid single-digit volume growth in ‘06 in the ticketing business, it looks like similar maybe this year given the good performance in Q1, tougher numbers in Q2. Just can you give us a sense of in aggregate, if you’re looking at mid single-digit growth in aggregate in the business on volume, can you just breakdown domestic versus international? On top of that, when does Asia Pac start to impact numbers on the positive front as you potentially look at expanding there, especially with the Olympics coming up, and then I have a quick follow-up. Tom McInerney: If I understand your question, Jeetil, I think through time we have gotten to, despite our historical success, good volume growth both domestically and internationally. Certainly, because of the acquisitions we have made and the fact that some of these are more emerging, less developed live event markets than in the US, we would certainly expect over time the international volume growth to outstrip that domestically. I don’t have a good volume estimate domestically for the year. I just said Q1 is very strong, Q2 was down 7% in terms of volume and we are guardedly optimistic for the back half of the year. How that adds up we will see, but certainly the domestic market we’re not going to extrapolate from one quarter to anything more permanent although we do expect international will grow faster over an extended period of time. In terms of Asia Pacific, I think that’s a longer term strategy. Certainly the Olympics and some other activities we have going on there are a good catalyst for that. I think it’s not in the financial planning horizon in terms of the next several quarters or year out, but I think longer term it should be a good opportunity. In-between, we have lots of other opportunities including investments we’ve made in various European markets.

In general, if you look at the ticketing business, the number of acts on a year-on-year basis flat or up, would you say for the industry as a whole?

It’s down very significantly. Again, it’s a function of when people releases their records and follow up the tours and it’s going to ebb and flow. Next question please.

Your next question comes from Aaron Kessler - Piper Jaffray.

On the Ask business, can you give us a sense for when do you expect increased frequency and retention at Ask to result in market share gains? And the marketing campaign, how are you measuring the success on the marketing campaign thus far? Thanks. Tom McInerney: On frequency and retention in terms of market share that’s going to happen over time. As you know, the business is related to driving new users, obviously frequency and retention we have seen good improvements in frequency and retention, but it’s offset by not having the growth in new users on the Ask.com business. The driver there will be the new marketing, but I think the frequency and retention gains should start to kick in more Q4 later in the year, albeit they are small as I laid out, small but certainly encouraging. In terms of the marketing, we can very scientifically look at the marketing spend in the US and relate that to new user growth and so the way to measure it is by new users showing up at the side and we’re not seeing it with this marketing campaign, the way we have seen it with prior marketing campaigns. What we’re doing on that front is retooling the marketing campaign, making it a much stronger call to action and much more product demo spots for later in the year and we hope that will have some effect.

Great. And just quickly in the lending business what kind of exposure does LendingTree have to lower quality, or higher risk loans versus the industry average? Or is it pretty comparable?

It depends on the lender you would look at, but versus overall we have a very low exposure to sub prime and lower quality loans and now even less so because we have really aggressively moved out of those products. That said, we will move back into them once margins stabilized and improved.

I’m just going to add on marketing on Ask, the strategy that we used at the beginning of the year and for the first six months was brand related more to make people understand that there was a different brand, Ask.com, as against the Googlization of the world and this was really a set-up to a more direct product oriented campaign which we are now just finishing the buying process for and we will begin a little bit later, I think a little bit later in this month, but predominantly September, October, November. We think that it was effective, but not necessarily effective on day counts of additional users for queries for Ask or new users, but it certainly was effective in repositioning Ask and introducing Ask X, which is the new Ask. There is no question given the product and its use, that we do have a compelling product. You have got to be more direct in telling people about it which is our plan for the balance of the year. Next question please.

Our next question comes from the line of Anthony Noto - Goldman Sachs. Anthony Noto - Goldman Sachs : Thank you very much. I had three questions, Barry and I will ask them in succession. My sense is that you won’t answer the first one, but I have to ask. Last call you had mentioned that you had not bought back stock because you were in the process of potentially pursuing some type of transaction or being involved in a transaction. Just wondering if you would comment if that’s again the same reason this quarter?

Well, that’s a pause. I thought you were going to go do all three questions and give me the opportunity to be not responsive cumulatively. Anthony Noto - Goldman Sachs : Yes sir.

I won’t answer it. As I say, you just can’t get into the area other than when we’re so to speak, blocked from doing so. So, I guess the absence of a comment is a comment. Anthony Noto - Goldman Sachs : That’s helpful. Second question, you’ve talked in the past about the fact you’re paying higher cash taxes this year than previously and that it may be beneficial to shareholders to protect some of the pre-tax income through leverage. Obviously the credit spread and the credit market have widened, making the cost of debt greater.

Same as that of Expedia as you may know. Anthony Noto - Goldman Sachs : Correct. Has your view on that changed given the credit market and obviously different capital structure and free cash flow characteristics of IACI?

Well, the cash flow characteristics of IACI are similar to those of Expedia. So, these are both companies with very large cash flows and we do not have leverage. What will happen with Expedia, which is that when we set out and we made our announcement that we’re out for a tender offer for $3.5 billion, every thing, every respect said to us that getting the money on decent terms was the easiest trick and the initial discussions were exactly what we would expect. What happened is then every day for about three weeks it literally changed where at the end, there was and is a credit freeze up. It will abate, more than likely, it certainly will abate at some point and when it does you would see us doing both for Expedia and for IACI sensible leverage in the companies, which we know makes sense, we’re desirous of doing it, you can’t do it during a credit freeze; not literally freeze, but it’s pretty cold. So, that’s our intention and no extraneous reason, I mean other than some really reason extraneous reason, will deter it. Anthony Noto - Goldman Sachs : Then the last question is Home Shopping Network continues to obviously be a challenge. You have the right people there. I was just wondering if you could comment, is the opportunity to an asset swap with HSN still a possibility or is that dead in the water?

I don’t know if it is dead in the water. I mean, the issue is that I believe we have very good management at HSN. I think we are beginning to see the sign of that management after a relatively short time, of what is much clearer; I mean just look at HSN and look at the new products we are introducing, and some of the very big days, and we had a $13 million day on Sunday or Saturday. When the product is there and it is getting there with more and more frequency, the early teething problems that come with having a new group of people are working their way through the system. It is not going to be overnight, but we are very confident that as time goes that HSN is going to be very competitive. Now relative to an asset swap at Liberty and the discussions we have with them. As you all know, discussions between particularly maybe these parties can go on endlessly, and they probably will continue at some point whether or not it’ll ever be in our interest to do so or in their interest I can’t really tell you.

Your next question comes from Mark Mahaney - Citigroup. Mark Mahaney - Citigroup : I wanted to ask two questions related to the Ask business first. Any update or new thoughts on the Google relationship, and the potential for substituting away from that? Secondly, as a strategy for bringing in new users, any thoughts on using points or contest with prizes as a way to attract new users like Microsoft has been doing with Windows Live Club Search?

We have looked at prizes and ways of incentivizing. We still look at them. We really think the best approach is the direct one. Our product is compelling, it is definitely differentiating, than other search products. Over time we think it is going to get adoption, we will use any trick we can to get there. If we ever find a good scheme on points, rewards or prizes we will certainly use it. As it relates to building our very long association with Google which expires on December 31, we are in a position we had hoped we would be when we originally got into this and purchased this Ask company, which is that we have interesting discussions from the three ad networks. That interest level is good enough for us to believe that whatever happens with this we’re going to be in a very good position in ‘08 for our ad businesses. I think that’s kind of a full answer. Let’s see anybody else here wants to add anything.

Our next question is from the line of Brian Pitz - Banc of America Securities. Brian Pitz - Banc of America Securities : Can you provide a little more color with respect to Ask margins in the quarter, as well as the longer-term outlook there? As a follow-on to a previous question, do you expect the Ask marketing spend going forward to be as heavy as it was in the second quarter? Just with respect to the OIBDA margins for the Ask business in the quarter, can you give us a little more color as to what was driving those margins and then some outlook going forward in terms of improvement on that side? Thanks. Tom McInerney: I will take the first part. We don’t break Ask out specifically, but we have been investing in Ask.com with both product and technology investments, as well as marketing investments as we’d indicated previously was heavy in Q3. We saw some query growth in the U.S. business. But we’re still at the very early stages of adoption and promotion of Ask 3D, which is what we’re calling the new product and we also had negative year-over-year revenue per query impact in the Ask business. We think that is the good news in a sense because as users we are using the new product, they were clicking on the paid links more and interacting with the algorithmic links more. We think that is a favorable user experience, we saw retention increases and frequency increases as a result of that, but it does have that kind of a short-term impact on revenue until you buildup that user base further. So all kind of a long preamble, but the Ask business remains a continuing investment business for us, it was in the quarter we expect it to be going forward. The good news is as we see it in our aggregate media and advertising results, we are getting very strong performance both top line growth and profit margin growth, in our Fun Web products business, our syndication network businesses are very strong. So we have the luxury of being able to invest in Ask.com while still doing just fine from an overall media and advertising perspective.

To the point of marketing spend I think it will continue and the reason is, we have now got an absolutely fantastic product that consumers are reacting to very, very well. It is truly differentiated in the market and we got to tell people about it so that we can grow shares. We’re going to do that smartly, and we are going to do that and expect to get share gains. ,The other point to what Tom said is all of this toolbar business and consumer applications business also helps to not only significant OIBDA for the company that we can reinvest in advertising, but also it gets the Ask brand out there on millions and millions of desktops. Tom McInerney: Particularly with young people.

Absolutely. Those products are all targeted at young people because if you turn them that certainly helps.

When people begin their habits rather than having already been hardwired to Google it is a very good opportunity for us.

Our next question is from the line of Robert Peck - Bear Stearns. Robert Peck - Bear Stearns : Just sticking along the same current theme, could you comment a little bit about Ask, what you’re seeing as far as click through rates, I guess they are down, but we would have guessed they would have been offset by CPCs. Secondly, Barry, could you also talk about, with all of the products on Ask, are there any barriers to entry there to prevent Yahoo!, or Google et cetera from replicating it? The last question, Tom, Fun Web products. Could you tell us what percent of media and advertising Fun Web is? Tom McInerney: First one, I don’t want to go through the metrics in specificity. We don’t divulge them, but just generally, coverage was down as we saw a continuing trend towards less commercial enquiries. We were getting CPC rates up, but not enough with the coverage decline and click through rate decline, so that the overall was down on Ask specifically in the low-single-digits. We’ve seen this before, when you change the product you get very different monetization impact and there are very subtle changes you can make that will change that and skew that. We don’t worry at all about short-term blips in monetization. As I said, retention was up 3%, frequency was up 4% on Ask in the quarter. As long as people are using it, we can tweak the monetization and the underlying ad networks’, Google’s performance has being just fine, we’ll make our money. Your second question?

The second question was about the barriers to entry. There are none. One thing that I think has been consistently true over the last few yeas, which is the group at Ask has continued to innovate and continue to be on the leading edge, I think of search innovation. I think they are going to continued to be. The differences between search engines are profound, meaning Ask as against everyone else. Because Ask searches with expert community rather than simply popularity allow us to do a whole series of things. Our answers, it allows us to easily expanding and narrowing your search, it gives you much better context. I’m not saying people can’t copy that, they can but I doubt that the other search engines are going to do so because their whole concepts are different than ours. Tom McInerney: The Fun Web business is approaching 20% of the search in media revenue. The media and advertising number we report also includes City Search, so it will be down into the mid teens, I guess as a reported segment, but it’s been growing very quickly and again at good and healthy margin, that’s probably all I will say about that.

Your next question comes from Jeffrey Lindsay - Sanford Bernstein. Jeffrey Lindsay - Sanford Bernstein : Hello, we wanted to ask you little bit about Match.com. Overall, Match.com’s revenue growth at 1% and international growth 13%, does this imply that the domestic business shrank, and if so, by how much? Secondly we note that the marketing expense was up in the international group. Is it the case that marketing expenses were up because of the growth in international business? Thank you. Tom McInerney: The North American business was off slightly on a subscriber count basis, but it grew on a revenue basis. We implemented a pricing change at the end of last year, and we really try and optimize, although certainly you want a very healthy subscriber growth base, at least for the liquidity of the service, and the quality to service market by market. We are constantly tweaking with prices and packages and things like that, and try and optimize the business from a revenue perspective. So that’s kind of our first test, and we grew quite nicely in mid-single digits in our North American business, year-over-year in the quarter. There is no question the international business is growing faster on both a sub basis and a revenue basis, and as we look at those markets and it varies market by market, you know they can be anywhere from one to three years behind where the U.S. market is in terms of development and we have pretty good share in a number of countries, we are certainly the largest pan-European competitor, so we think that’s healthy for the business.

While we take share in some places we are going to be really aggressive every place where we can compete, we should compete much more strongly in certain market where we are late entrants and haven’t been as strong, so that we will see certainly the next year or so. Next question please.

Our next question comes from the line of Jeff Shelton – Bleichroeder. Jeff Shelton – Bleichroeder: How much of softness in the Ask.com revenue was related to international versus domestic? You indicated that traffic acquisition costs for you guys was going up, have we reached a point where that stabilized or do they continue to inch up? Finally there were some cross talk when you were talking about the OIBA expectations for the remainder of the year. I was hoping you could mention what those are again? Thanks.

Let me take the first and the third and I may ask you to repeat the second one, unless my colleagues got it. First of all there was no softness in the media and advertising line. We had a very strong revenue quarter there, up over 30% and in the UK business which is its smaller piece of our over all business there, we don’t break it out separately, it is not growing as quickly, it has been a very competitive market for us and we are rolling out the same products and marketing strategy that were doing here in the US. But certainly it didn’t negatively impact the aggregate segment because it is a small piece of the aggregate segment. On the third question and then I will turn it over to my colleague on the second. The only thing I said earlier with that as it related to Q3, we were looking for a flat operating income before amortization quarter year-over-year, obviously plenty of moving pieces to that, but that was what our target was. Tom McInerney: On the traffic acquisition costs I wouldn’t read much into that in any quarter to quarter swing. At the end of the day that business which has been doing very well and continues to, is managed for OIBA and managed for OIBA growth and they are doing a great job signing up new deals. some of those deals coming in at higher margins, some of them come in at lower margins in terms of TAC but what’s great about that business is not only to do we have very good syndication business with the Goggle link, but in addition our own Ask sponsored listings businesses is doing very well. It is adding thousands of new advertisers and its growing and its doing just fine in certain key verticals.

Our next question comes from the line of Doug Anmuth - Lehman Brothers. Doug Anmuth - Lehman Brothers: Can you provide an update on the LA on air distribution for HSN? Secondly Tom, can you comment on how we should we think about the legal expenses for Ticketmaster, if these are really one quarter in nature or if we should think about them as little bit more ongoing. Thank you. Tom McInerney: We are still not back on our analog distribution, we have digital carriage in LA. For those who don’t recall the history, we have agreed to work with Time Warner on some capacity issues they have there related to the acquisition they did, and we agreed to temporarily give up our analog distribution at their request with the expectation that it will return. , I don’t know have a precise estimate on it, but that continues to be our understanding with them. On the Ticketmaster legal, yes, it was one-time and that’s probably all I need to say.

Our final question comes from the line of Imran Khan - JP Morgan. Imran Khan - JP Morgan : Media advertising business has seen strong growth from syndication business. If you look at your competitors, their syndication on network business growth rate decelerated significantly. I am just trying to get your perspective on what kind of confidence level you have on the growth of that business? Secondly, the return rate for Home Shopping Network was high, I think highest since Q1 of 2002. What are you doing to reduce the return rate and why do you think the return rate was so high? Thank you. Tom McInerney: On the first of your questions, the growth has been very strong. You see it in the metrics and it’s been an increasing percentage of the mix. It is like a lot of things. It’s hard to predict that it will sustain at these levels, but this market is growing explosively. What we are finding is that not withstanding that as we work with various partners, notwithstanding that it is competitive and there are other people in there. We approach clients with customized solutions, in certain cases things maybe competitors won’t to do, focus on service, focus on meeting their needs, and we win some attractive business, sometimes at a higher TAC rate than we prefer but it’s still profitable. The business has been a very nice driver of our results there. Can it continue at these levels? I don’t know. There is a lot of business though, we don’t see anything that says it necessarily is going to slow, we’ll just have to see how it plays out. On the HSN return rate question, we have been seeing higher return rights for the last several quarters. We have analyzed it top, down and sideways, and our best bet, and it’s an instinct, more than something we can prove absolute , because it tends to cut across a number of different product categories, is that it relates to changes we have made that actually made the product easier to return for customers phased in. It was basically in the back half of last year. This is an easy return thing where you can , pick off the label and put it on. It’s much easier to get the product back. We think by doing that we have encouraged -- and again, this is one of the things, again, once you comp it, comp the year, when that was implemented that should benefit you. If you’re doing the right thing by the customer, ultimately you’ll be fine. Every other possible cause in terms of product quality, complaints, everything else is not something that we can put our finger on it. So, we’re hoping that is it and that it will change once we comp that and ultimately lead to increased loyalty.

With that, we thank you all and we look forward to talking to you next quarter. We’re hopeful that that quarter is going to certainly solidify from this quarter’s poor performance. Nothing that we see today thus far would make us feel otherwise. So, thank you all and we will talk with you soon.