Barry Diller

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Barry Diller is shaking up his company IAC, rebranding the company as People Incorporated as it undergoes a significant shift in strategy.

Diller will shift to a role as executive chairman in the move, with Neil Vogel set to become the company’s new CEO.

Diller outlined the changes in a note to IAC shareholders Tuesday, noting that going forward the holding company will focus on its MGM holdings and the People publishing business.

“We’re transitioning the necessary staff of IAC into the corpus of People,” Diller wrote. “That will significantly reduce our overhead as we concentrate on our two assets: People publishing and our holdings in MGM Resorts.

“As for me, I plan to continue to do what I have done here for years as Chairman and Senior Executive—be an advisor, instigator, stimulus, and sometimes irritant to the process,” he added. “I will also continue to oversee our MGM investment.”

The changes will mean staff reductions. In an SEC filing the company said that it expects to incur about $14 million in severance and related expenses, $48 million in non-cash stock-based compensation expense and as much as $1 million in other costs related to the plan. The company expects to see annual run rate savings of around $40 million when the integration is complete.

You can read Diller’s note, below.

Dear Shareholders,

Today’s news is that IAC is changing its corporate name to People Incorporated.

Throughout its three decades, this company has always been opportunistic. That’s the only guidewire I’ve ever followed, and I believe today and tomorrow’s opportunities will best be held in the corpus of this new corporate name.

Some backgrounding will be helpful in explaining why.

I bought into little Silver King Communications in 1995. It had about $40 million in sales, and as it evolved over the next decades, we became HSN, then USA Networks, and finally, in 2003, IAC/InterActiveCorp, and then even more simply, IAC Inc.

Those name changes were the result of our changing business model. We began as a string of small television stations, then merged with HSN, a home shopping channel, and a few years later bought the USA Networks and Universal Television. At HSN, we gained some expertise in ecommerce and interactive models in the primitive convergence of television screens, computers, and phones. And then came the internet revolution in 1995 and out of that a unique business model—buying, building and creating interactive business. Over the years, that has resulted in our owning and operating more than 200 companies and overseeing well over 100 minority investments.

By then we were the definition of a conglomerate. As we evolved, I came to believe that operating all these disparate entities wasn’t the optimum method and began a process of spinning them out into their own independent companies. Once we felt they were of sufficient size and success I thought they’d be better off on their own and sought to become a sort of anti-conglomerate, ‘spinning out’ 11 public entities.

All this activity over these past three decades has resulted in creating over $144 billion of value at peak equity prices.

In the last few years, ecommerce and interactivity valuations soared, new opportunities became fewer, and we began to scale down our acquisition activities to concentrate on the one sector we felt had the most potential in such a fast changing environment, that of the publishing businesses we’d built and acquired over the last 14 years. It was, as usual for us, a contrarian move but as I outline below, a most successful one.

As all sorts of potential disintermediation loomed in media and ecommerce we also began to search for businesses that couldn’t be disintermediated. Out of that process we began to accumulate shares in MGM Resorts, believing that there was no technology that was going to displace a customer from going to Las Vegas or any of MGM’s other physical properties. Our original 12% stake in MGM has now grown to 26%. MGM Resorts is an extraordinary operation powered by a compelling mix of iconic resort destinations, scalable digital platforms, premium brands, an expanding global presence, and, under its CEO Bill Hornbuckle, an outstanding management team. MGM owns 40% of the Las Vegas Strip—an entertainment nucleus that simply cannot be replicated anywhere in the world. MGM’s leadership position in Macau remains the envy of the industry, and its mega resort abuilding in Japan is a giant future opportunity.

IAC Changes Name to People Inc. in Major Shakeup by Barry Diller