WHEN: Today, Thursday, April 16, 2020
WHERE: CNBC’s “
The following is the unofficial transcript of a CNBC interview with IAC and Expedia Chairman and Senior Executive Barry Diller on CNBC’s “Squawk Box” (M-F 6AM – 9AM) today, Thursday, April 16th. The following is a link to video of the interview on CNBC.com:
All references must be sourced to CNBC.
ANDREW ROSS SORKIN: Meantime, here to discuss the re-opening of the economy and the state of streaming, travel industry and what all of this means is Barry Diller. He’s the Chairman and Executive of IAC and Expedia. And we’re thrilled to have you join us, Barry, this morning. Nice to see you.
BARRY DILLER: Nice to see you, too. I hope you’re all well.
ANDREW ROSS SORKIN: I hope you’re well. You know, last time we saw you was in-person in the fall when we had just redone our set. So much has changed since then. You and I have emailed a little bit but I’m just curious sort of just how do see the landscape?
BARRY DILLER: Well, I see the landscape as cataclysmic. We’re in something that’s very hard to be objective about, because we’re in the eye of it, we’re inside of it. So, we can’t really see it for what it is. But, look, everybody says the same thing. There’s nothing like it before. And while we know some things, we know nothing about what’s going to happen, how we’re going to get out of it, what will have to change? Will this be some really profound difference in people’s lives in the future? But, so, I see it as everybody’s scared. The fact that we have so much media, so much information, all of it telling us that we’ve got to be scared about co-habitating with anyone. So, that ain’t good.
ANDREW ROSS SORKIN: Barry, let me ask you this though. You bought Expedia right after 9/11. You went through with that transaction even after 9/11.
BARRY DILLER: Yeah.
ANDREW ROSS SORKIN: Because you believed that on the other side of it we were going to go back to normal.
BARRY DILLER: I absolutely did.
ANDREW ROSS SORKIN: Do you feel the same way about where we are right now?
BARRY DILLER: No. What I said then was if there’s life, there’s travel. I still do believe that. But this is not going to be what happened then, which was a very, very quick return to normalcy. That is not going to happen. At best, we’ll have kind of a rolling way out. As far as travel is concerned, while I’m absolutely optimistic that at some point, but I don’t think soon, I don’t think it’s until probably September, October, November, December, really get life back. And in order to travel, you’ve got to have that. So, they’re totally different situations. This is not analogous. I don’t think it’s analogous to anything. Certainly not analogous to 9/11 and to the financial crisis in ’08.
ANDREW ROSS SORKIN: And so, given your ownership of Expedia and your work at that company, what are you telling your employees there? How are you planning for that? What do you expect the business to look like over the next 18 months?
BARRY DILLER: What we’re doing at Expedia, somebody — said no good crisis goes away. We’re using the time to do the things we were not able to do when we were running 100 miles an hour to keep up with our growth. So, we’re really spending truly, you know, the quality time that we’d spend other than dealing with difficulties, particularly with travel – small business or large. One day the door closes and, you know, if you’ve got a small business, you have nobody coming in and you’ve got no revenue. Well, travel, travel-related companies have no revenue. Expedia, like many large, large travel companies, has a very large cost basis. So, we haven’t yet dealt with that specifically, but what we’re doing is we’re doing planning inside the company — so we are stronger than when we went into it. That’s all of the planning that basically we are doing.
ANDREW ROSS SORKIN: What do you make of the bailouts of the airlines?
BARRY DILLER: Necessary. Full stop. Look, you’ve got to bail everyone out. This is like, you know, you say when you’re picking winners, losers, you’re saying this or that. Everybody is in the same position, which is the world stopped, worldwide. And so, anybody whose income — and you see this, you drive down streets and you see big cities, small cities and you see nothing is open. They’re ghost towns. The damage that is being done every day is enormous. Everybody needs to be bailed out – and we’ll worry about paying the bills later.
ANDREW ROSS SORKIN: And when you think about travel, for example, and the future of business, one of the things that’s going to be so critical, and we’re hearing this from other CEOs, the idea of testing. Maybe you’ll get tested on your way into an airplane, just so everyone knows everyone on the plane is okay. Given the travel is your business, who should pay for that, in the future?
BARRY DILLER: Pay for what? Testing and things like that?
ANDREW ROSS SORKIN: All of it, yeah.
BARRY DILLER: It will be absorbed, I think, in the cost of business. But, you know, what has to happen, it’s the fear has to stop — the fear of associating with people. You know, plenty of friends of mine who say, I’m not going to go to the theater, I’m not going to do this because I’m afraid. Actually, right now, people are saying even though we’ve been isolating for three weeks, you can’t come over to my house, which is kind of nuts to me. But the fear is the next thing that’s going to have to thaw. Until that happens, whether you test people on the way in or whatever you do, at some point everybody has to be comfortable being a foot away from other people. And if that fundamentally changes, then a huge amount of our infrastructure — which I don’t think will happen.
BECKY QUICK: Barry, I just had a question about what you were saying about how people say, Okay, even though you’ve been isolated for three weeks, you can’t come over to my house. I think that goes to the idea that not everyone treats isolation or treat social distancing the same. I know people who are staying home but they go out to stores, maybe they go to restaurants, maybe they have certain things they do that I wouldn’t feel comfortable with. I think that’s our biggest problem is, you’re only as safe as your weakest link. You can’t tell or know exactly what somebody else’s standards are or how safe they are going to be.
BARRY DILLER: Yes, but you kind of have to get over it. You go into a theater and you’re sitting literally within inches of people. You go in thinking that no one is going to come in with an enormous toxicity, whatever that is. No one is going to come in who has some terrible communicable disease and sneeze on you. You kind of just trust in that. You’re going to have to get — we’re all too frightened right now. We’re going to have to get over it. Or everything will change.
ANDREW ROSS SORKIN: Hey, Barry, wanted to pivot the conversation and talk about media and also the state of advertising given the IAC business. How do you see that – over the next 12 months?
BARRY DILLER: We’re kind of the tale of two cities for me. On one hand, I have IAC, which is advertising, home services and – and all of that, you know, of course, it’s hurt some. But it’s kind of stable. And IAC is very well-capitalized. And so, I have all these hungry players in my company who want to go out and buy things that are very aggressive and think of this opportunity. While on the other hand, I have Expedia which has no revenue. So, you know, a bit of a weird constant imbalance. As far as advertising is concerned, well, why would you — I mean, at Expedia, for instance, we spend $5 billion a year in advertising. We won’t spend $1 billion in advertising probably this year. You just rip that across everything. There you are.
ANDREW ROSS SORKIN: And so that’s the travel industry. The question is, how hard do you think it’s going to hit other media businesses?
BARRY DILLER: Well, of course, it’s going to hit —
ANDREW ROSS SORKIN: Even some of the big —
BARRY DILLER: Travel industry is a proxy. Yes, there are some things that are worthwhile advertising during this period. Basics, things like that, which — Look, we haven’t seen, economically — I mean, people — why anybody is pouring over these first-quarter numbers is clueless to me. The market can go up in the atmosphere – but getting to the second quarter, you’re going to see advertising across the boards. Why would it sustain?
ANDREW ROSS SORKIN: Barry, you just said something very interesting, which is you didn’t understand why the market could go up in this environment. What do you think the fair value for the market would be in this environment?
BARRY DILLER: How the hell would I know? No one knows these things. But when we see the damage that is being done everywhere, what we’ll really see in the second quarter from the first quarter, how can you get fair value? How can you get fair value for a company, and you know, again, I absolutely believe a year, two from now this will be over. One way or the other this is over or we’re over. So, but how can you value that today? I don’t think you can do it. I certainly can’t.
ANDREW ROSS SORKIN: In the media space that you lived in for so long, Netflix just passed Disney in market cap yesterday.
BARRY DILLER: Yeah.
ANDREW ROSS SORKIN: We’ve had lots of conversations about streaming and the future of big media. I’m wondering how you see all of this shake itself out and what the pandemic does to that whole space?
BARRY DILLER: Well, I think streaming, it will have an effect on it for sure. Again, you go a few more months and while people say, one of the last things I’ll cut is my subscription to entertainment which I desperately need to get through the day. That will eventually take its toll. People will not have the discretionary income to afford it. But it doesn’t change the dynamics of anything. You’ve got the competitors. Streaming is taking over the world. Hollywood is irrelevant. The only companies that have a true path, absolute clear business model path forward have nothing to do with the history of the entertainment business. Amazon and Netflix. Everybody else, good luck to them. I mean, they may be able to build subscription services that may be profitable, but that world has changed forever. I think this pandemic has nothing to do with — other than earnings are going to be much less for a while.
ANDREW ROSS SORKIN: Right. You talked about opportunities during this pandemic, or at least that there are people within IAC thinking about that. Are there places that you imagine you might try to invest some money over the next 12 months?
BARRY DILLER: Oh, my god, yes. Look, of course, there’s opportunity. You just have to have a long view, be sure-footed, you have to look at things not only as they are but as you think they will be. But we’re looking at some very large potential acquisitions for IAC. And, of course, it’s the environment where if you are inquisitive, you’re going to do the thing that for many years everybody has asked for. Oh, my gosh, everything is other inflated, prices are crazy it, you can’t buy things for this or that without these huge premiums. Well, you know what? That’s all gone. So, if you have capital, you know, what could be a better time than to exploit what is, you know, a terrible downfall for many companies?
ANDREW ROSS SORKIN: Barry, we’ve often talked politics with you over the years, and I’m curious what you think is going to happen politically in this country as a result of this pandemic and what you think its impact is going to be on business? Because you start to think about the enormous debt that we’ve taken on, the questions about taxes, corporate taxes, individual taxes, buybacks, dividends. How do you thin that changes?
BARRY DILLER: Well, again, I think as far as buybacks are concerns — if you have plenty of capital and you don’t have a huge cost base that you will service with no revenue, then for sure, buy back your stock. Politically, this is again, of the many unknowns, I don’t know. You know, we currently have an administration as infomercial. So, I don’t know if whether in the end, people say, Please, no more of that. I’ll take any alternative. Or whatever I can’t — of course I can’t predict. I can predict it. Because I actually think the infomercial administration ends in November. But as far as long-term, the damage that’s being done can’t be assessed right now. It’s going to have a huge political impact. Whether that tilts you this way or that way, I can’t really tell. This is not short-term, the effects.
ANDREW ROSS SORKIN: Barry Diller, we appreciate you spending time with us this morning. It’s always an education. We are hoping you stay safe.
BARRY DILLER: Thank you. Wish I could be less bleak. I am very long-term. Thank you.
ANDREW ROSS SORKIN: Okay. I’ll talk to you soon. Thanks so much. Becky?
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