Ask Jeeves' value? Answer: $1.9 billion

SAN FRANCISCO — Barry Diller once altered the country's television viewing habits. Now the media-industry veteran wants to change the way people navigate the Internet.

Best known for creating a fourth television network nearly 20 years ago, Diller yesterday bolstered his electronic-commerce company, IAC/InterActiveCorp, by buying online search engine Ask Jeeves for $1.9 billion in stock.

Diller hopes to use IAC's financial muscle to attract more traffic to Ask Jeeves, partly by luring visitors away from search-engine icon Google and Internet powerhouse Yahoo!

Oakland, Calif.-based Ask Jeeves believes it has developed a more elegant approach for processing search requests, but it hasn't been able to persuade most Web surfers to try something different.

"We believe ... IAC will help us realize our full potential," Ask Jeeves CEO Steve Berkowitz said in a conference call yesterday with analysts.

By snapping up Ask Jeeves, New York-based IAC is filling a hole in its diverse roster of Web sites, which include online travel agencies Expedia and Hotels.com, social sites Match.com and Evite.com, and other popular services like Ticketmaster and LendingTree.

"We now have all the clay we need to do whatever we need," Diller said during yesterday's conference call.

American Technology Research analyst Mark Mahaney isn't sold on the IAC-Ask Jeeves combination. "I'm not sure it's a good fit unless IAC just wants to bleed money marketing [Jeeves], and I really don't think they want to do that," he said.

IAC has ample cash to spend, with $1.16 billion in the bank as of Dec. 31.

Diller developed a reputation as a business visionary when he launched a fourth television network in 1987 as chief executive of Fox.

Skeptics ridiculed Diller's ambitions, but the Fox network emerged as a popular alternative to ABC, NBC and CBS, and helped change the tenor of television programming.

In recent years, Diller has built IAC into an e-commerce conglomerate that earned $151.8 million on $6.2 billion in revenue last year. The company will split up later this year when Expedia and the other travel sites are spun off.

IAC's shares fell 66 cents, or 3 percent, to close at $21.63 yesterday, while Ask Jeeves' shares surged $4.43, or 18.3 percent, to close at $28.67.