Barry Diller - Chairman and CEO Doug Lebda - President, Chief Operating Officer Thomas J. McInerney - Executive Vice President and Chief Financial Officer

Safa Rashtchy Piper Jaffray & Co. Anthony Noto - Goldman Sachs Mark Mahaney - Citigroup Paul Keung - CIBC World Markets Justin Post - Merrill Lynch Scott Kessler - Standard & Poor's Equity Robert Peck - Bear, Stearns & Co. Michael Millman - Soleil Securities Imran Khan - JPMorgan Chase & Co.

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to the IAC Interactive Corp.’s second quarter 2006 earnings conference call. At this time, all participants are in a listen-only mode. Following today’s presentation, instructions will be given for the question-and-answer session. (Operator Instructions) As a reminder, this conference is being recorded today, Tuesday, the 1st of August, 2006. I would now like to turn the conference over to Mr. Tom McInerney, Executive Vice President and Chief Financial Officer. Please go ahead. Thomas J. McInerney: Thank you, and good morning. Joining me on this call is Doug Lebda, President and COO, and Barry Diller, Chairman and CEO. As you know, we may during this call discuss our outlook for future performance. These forward-looking statements typically are preceded by words such as “we expect”, “we predict”, “we believe”, or similar statements. Also, you are aware that there are risks and uncertainties associated with these forward-looking statements and our results could 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 and I refer you to our press release and the investor relation section of our website for all comparable GAAP measures and full reconciliations. After I highlight our financial results, Doug and Barry will each make some comments before we open the call for questions. For the second quarter, revenue increased 18% to $1.6 billion, and operating income before amortization grew by 34% to $165.1 million versus the year ago period. Excluding the results of IAC search and media, which we did not own in the year ago period, and excluding transaction expenses in inter-company eliminations related to the spin-off, each of which expanded our corporate and other losses in the year ago period, Q2 revenue increased 9%, operating income before amortization grew by 12%, and operating income increased 15%. Adjusted EPS was $0.32 for the quarter compared to $0.28 in the year ago period. GAAP net income and EPS were both down on a reported basis because the prior year period included significant gains on the sale of our interest in VUE and UVIA, as well as significant contributions from discontinued operations. For reconciliations between the adjusted and GAAP figures, please refer to this morning’s release. For the six months ended June 30th, free cash flow was $253 million, up $19 million from the year ago period, due primarily to higher operating income and non-cash expenses. We are pleased with our free cash flow generation thus far as we expected to have a tough comp throughout the year due to the fact that we paid very little cash taxes a year ago. Turning to the operating results in our principal areas, Q2 marked the first quarter in which the April 2005 acquisition of Cornerstone brands was fully anniversaried and retailing results. The catalogue business posted revenue growth in the high-single digits, which was largely offset in the U.S. by a less than 1% sales decline at HSN. Shoebuy, which we acquired in February, 2006, and is growing in excess of 60% on a comparable basis, also contributed modestly. As you know, a confluence of executional issues over the last past year has led to disappointing top-line performance at HSN. New leadership has brought tremendous energy towards revitalizing HSN’s operations to which Doug will speak in a moment. As we have said before, we expect to see this benefit over time. While hardly good, Q2 was better than Q1 and we hope for continued gradual improvement. In the back-half of the year, however, while we expect to see somewhat improved top-line performance, we also expect to see some margin pressure arising from cost pressures in the distribution area and in certain other operating expenses. HSC Germany had a very disappointing quarter, with a 17% decline in sales. We saw continually improving growth throughout 2005 and unfortunately, that momentum reversed itself in the first-half of this year. There are some discreet issues we are in the process of fixing, but we do not expect an immediate turnaround here. In lending, we grew transmitted [QX] by 32% and revenue by 26% in a very challenging operating environment. Similar to the first quarter, lower close rates led to proportionally higher marketing costs, and thus a year-over-year decline in profits. As we outlined on last quarter’s call, when market dynamics became clear in Q1, we took aggressive action to reduce planned marketing expenses. Because Q2 amounts were largely committed, our actions would primarily affect the third and fourth quarters. That said, in the second quarter, it cost us about 20% more to get every customer versus the prior year period, which is less than half the increase we saw in Q1. For the back-half of the year, we currently anticipate single-digit year-over-year revenue growth but better margin performance sequentially. Now let me speak to our media and advertising sector, and specifically ask.com. On a pro forma basis, IAC search and media grew revenue by 21%, a higher revenue per query and higher search query volume across most properties. Let me give you some color on this. Ask.com in the U.S., where we are investing real marketing dollars and product development resources, is showing very good growth in terms of queries and market share. This is largely offset by declines at ask.com in the U.K. We are also seeing strong growth in third-party distribution of our search results and growth in our fun web products toolbars, which you may know as our Smileys product, but a decline from partners distributing our toolbars. In August of last year we went to the three paid link format on ask.com in the U.S., so our Q2 revenue growth was good in that we were comping against this higher monetization format. As we move into the back-half of the year, we will be comping against the three paid link implementation partially in Q3 and fully in Q4. We continue to be in investment mode for IAC search and media and are not focused on current profitability, as we are working to drive volume and share growth while being mindful of creating the business that will scale to real profitability over time. Our other largest businesses, ticketing, vacations, and personals, continue to deliver. TicketMaster’s strong momentum continued in Q2, selling more than 30 million tickets for the third consecutive quarter, and achieving all-time highs in revenue, which increased 14%, profits, and online penetration, thanks to a healthy summer concert season and 21% higher international revenue, with business in the U.K. and Australia performing very well. Vacations top-line grew 9% and profits even faster year over year. Intervals results benefited from 5% growth in members, a 16% increase in online confirmations, and just overall great execution from one of our most seasoned management teams. Personals grew revenue and operating income before amortization by 28% and 66% respectively on solid, worldwide performance with each of our major markets contributing favorably. Matches geographic diversity is really driving balanced growth, as domestic and international growth rates are each solidly in the teens. Turning to the balance sheet, we have continued to repurchase our shares from early May when we reported Q1 results through last week. We repurchased 19.5 million shares at an average price of $25.84. This brings the year-to-date total to 27.1 million shares at an average price of $26.80, leaving 15.7 million shares in our current authorization. We finished the quarter with cash and securities of $2.2 billion, and pro forma net cash and securities net of debt of $1.3 billion, so our balance sheet remains very strong. Taking into account the repurchases we have done since quarter end, the net cash and securities number will be $1.1 billion. With that, Doug will make some remarks.

Thank you, Tom, and welcome, everyone. I will dive right into some comments on our businesses. At retailing, new management has been in place now for a few months and we are very pleased with the job Mindy Grossman and her team are doing to get HSN back on track. Core to this is merchandising, and Mindy is mapping out a rigorous game-plan to ensure that the products we sell are compelling, differentiated, and intelligently priced. Mindy and team are working through their merchandising plans from both a short and long-term perspective. In the short-term, making sure that we are utilizing every possible lever to drive minute-by-minute results, while putting in place the merchandising talent, product, development plans, and vendor relationships that are critical to driving growth over the long-term. As part of this, we have recently hired new senior leadership in both hard and soft home goods, areas where we have had some weakness in the past. On the product front, we have added companies like Phillips Magnavox, Motorola, Samsung and [Daisun]. We have integrated a number of Shoebuy’s products on hsn.com, expanding HSN’s already popular footwear and accessories business. Mindy’s team is also looking to reinvigorate HSN’s brand and is evaluating strategies to continue and accelerate the already strong growth we have experienced online. With several million active customers across our retailing brands, and many millions more that fit our demographic profile, the opportunity for HSN to sharpen what it stands for and effectively communicate that message through the live show, hsn.com, and all other consumer touch-points, is significant. We now have a leader who is a seasoned brand builder and is, suffice it to say, more than excited by the potential in front of us. Ticketing has been an outstanding performer. What is really amazing is how this 30-year old business with its solid market position just continues to innovate, expand, and consistently renew and add clients. TicketMaster’s global growth initiatives keep proving successful. Just last week, TicketMaster announced its entry into Spain, one of the top-five ticketing markets in Europe, with the acquisition of “Tic Tac Ticket”, which works with more than 400 event organizers across the Spanish market. We have talked in the past about all the ways that TicketMaster is helping clients sell more tickets. Recent initiatives in this regard, including our ticket exchange services, which are gaining good traction among consumers who value the convenience and security to purchase and resell tickets, and TicketMaster’s event-authorized secondary market site. During the quarter, the number of tickets sold through our sports ticket exchange service increased 86% year over year. Another way we are adding value for clients is through dynamic pricing initiatives. TicketMaster auctions continues to flourish. In the second quarter, the number of auctions increased three-fold from the year ago period, and we extended our auction service into the U.K., our second-largest market. In lending, we are in the midst of a contracting mortgage market, which the MBAA expects to decline 18% this year. Down cycles can certainly be painful, but less so for those with an established brand and a differentiated value proposition as Lending Tree clearly has. While we are not in the business of predicting the overall mortgage market, we are determined to do everything we can to ensure that we emerge from this cycle stronger than we were going in, and with a greater market share. Rising rates make refinanced mortgages less compelling with every fed rate hike, but there are still billions of dollars of opportunity in refinance, especially for consumers wanting to replace adjustable rate mortgages with fixed-rate mortgages. We are targeting those customers who still have an opportunity to lock into relatively low-fixed rate mortgage rates, as well as continuing to focus on growing our purchased and home equity products. To that end, we have aggressively stepped up our efforts to increase purchase loan volume by significantly increasing the size of our purchase agent teams at Lending Tree loans, and by adding more than 20 new purchase lenders to date, who are obviously focused specifically on that market. In real estate, we believe that our new e-brokerage business can give us a distinct advantage in penetrating this massive market opportunity. With more than 130 agents on board in Portland, Denver, Seattle, and Salt Lake City, and over 270 real estate contracts signed with consumers over the past few months, we have real traction. We are also in the process of overhauling realestate.com, which is intended to accelerate the site’s evolution from primarily a lead generator to one that is consumer friendly, listing-centric, and feature rich. This was not possible without a critical mass of listings, but we now have 1.9 million listings on the site, representing approximately 75% coverage in the top 75 U.S. markets and up from 1.3 million listings last year at this time, very much putting us into the game. Within media and advertising, ask.com’s marketing efforts have helped drive increasing amounts of traffic to the site, pushing query growth, frequency, and retention all higher. Ask.com’s market share has been growing fastest among the major search engines. It is up 78% year over year according to comScore, albeit off a smaller base. But our work here is really just beginning. We are relentlessly focused on innovation and differentiation in this space, and will continue to launch new products and features in an effort to improve the user experience and keep people coming back to ask.com again and again. As Tom mentioned, we are experiencing choppiness on the distribution side. The loss of Dell will eventually impact our overall growth and we are doing our best to manage through it. Our goal over time is to add new distribution deals, but even more so to add organic growth at ask.com. In that regard, we are certainly heading in the right direction. At Citysearch, aggressive sales efforts and a stream of new products and user experience enhancements, including cleaner site navigation, a simpler user review process, and a great new map product, as well as innovations in mobile, are helping make Citysearch the go-to local site for an increasing number of merchants and consumers. With our unique monthly users growing significantly year over year, we estimate that at 21 million uniques in June alone, our biggest priority has been to add local merchants, which we think is the heart of our competitive advantage in this space. As of June 30, Citysearch eclipsed 50,000 PFP merchants -- an increase of 57% from last year. Last year, our personals business was a turnaround story. This year, it is a bona fide growth story, thanks to very solid execution. Match.com has been particularly effective at marketing, with successful offline campaigns in the U.S, U.K. and Scandinavia during the first-half of the year, helping increase paid members by 15% year over year at the end of June. Domestically, match.com's brand awareness has recently surpassed eHarmony, and it now leads the category with unaided brand awareness of 38%. Internationally, match.com has entered an agreement with Yahoo! to power the Yahoo!'s personal service in the U.K. and Germany over a multi-year period -- obviously a big win for this business. Our discounts business has really struggled, due to intensified local competition and a slower-than-anticipated migration online. Last week, we announced a new CEO, MaryAnn Rivers, whose successful background in direct marketing at Valassis made her our choice to lead a turnaround at EPI. For years, we have been collecting these assets with the ambition of them working together. We have historically pursued opportunities, such as consolidating vendor contracts and cross-promotional activities, and we have achieved some success. But we have now begun a more earnest process, particularly in two areas -- institutionalizing company-wide best practices and building a world-class human resource function. Regarding best practices, this year we are focused in several key areas, including online marketing, offline marketing, search engine optimization, strategic planning, public relations and information technology. We have established a rigorous process to ensure that we achieve the goal of shoring up areas where we are weak and spreading better ways of operating around the company. This process is working. In each area, we have established a concrete list of initiatives that will now be implemented, two of which are already underway and that I can address today. The first is B-to-B telesales. We are using PRC's platform to evaluate to what extent we can consolidate and rapidly grow B-to-B sales. The goal here goes beyond cost-savings. We are looking to streamline our recruiting and training processes, as well as favorably impact merchant enrolment, and to do this on a significantly greater scale. The second area is offline marketing. Our businesses have spent the last several months working to consolidate our offline media buying with one agency. By getting greater scale in media strategy, planning and buying, we can be more effective and cost-efficient. In fact, after going through a process of selecting a single agency and coordinating our efforts at the businesses, we believe we can save at least $10 million annually. We have also put a program in place to develop our highest performing leaders. We are investing in this area to ensure that, as our best and brightest look to develop their careers, they have every opportunity to do so inside of IAC. In just a few months, we have internally transferred 25 senior engineers, business strategists, and legal and financial experts throughout IAC, parlaying their skills and rewarding them with new challenges and life experiences. We have amazing brands, each with distinctive consumer offerings, extraordinary market potential, and strong management. By arming each of them with resources, expertise, and efficiencies, they can stay relentlessly focused on innovating for their consumers, executing with precision, and seizing new opportunities. Now Barry will make some remarks.

Thank you. I promise you that we are going to get into the questions quickly, but first, since we announced the Expedia spin-off, it has been seven consistent quarters that we have reported good results. As I have said in the past, we are an interrelated and interactive conglomerate and we are proud of it. We are beginning to prove we can operate multiple businesses across a wide spectrum, pushing fast growth here, husbanding resources there, reorganizing and retooling people and models whenever it is necessary, nurturing new opportunities, sharing the best practices of thousands of smart people -- all the while growing the whole and sensibly allocating capital between opportunity and returning value to shareholders. Currently, we are returning that value in the form of pretty significant stock repurchases. Whatever comes of this economy and its hopes and risks, our mix of businesses, our steady progress, and our strong balance sheet ought to see us better than through. Now that all that pro forma talk has been completed by me and my colleagues, we would be happy to answer any of your questions. Operator?

(Operator Instructions) Our first question is coming from Safa Rashtchy with Piper Jaffray. Please go ahead. Safa Rashtchy - Piper Jaffray & Co.: Good morning, everyone. A couple of questions. First, Barry, you just talked about the economy and how it may go up and down. Could you give us your assessment of how cyclical or counter-cyclical your businesses are? Do you think you have a reasonably balanced portfolio? It seems that certainly real estate is being affected by that sector’s cyclical trend, and ticketing, I would assume, is quite sensitive to the economy. Could you give us your assessment of that? I have a quick follow-up.

I think like any good multi-piston engine, we have a lot of different characteristics of our businesses. I do not know what you would say is cyclical or counter-cyclical, but I would say generally speaking, our retail business has historically been to the economy. When the economy has been poor, these electronic retail home-shopping businesses have done quite well. I do not know that I could go into other particular details on this that would be fairly or particularly illuminating. I think the balance is -- the mix is pretty good. You go from entertainment in ticketing to personals -- you know, things get worse, I think people will want to flirt more. I could rip on and on about this. I do not know. Tom, Doug, do you have anything to add to this?

I think in general, these businesses have tended to perform quite well through different economic environments. Ticketing Barry mentioned, I think interval is the same, and I think across these businesses, we are driving a number of what I call secular growth opportunities. Our hope is that outweighs anything that is going on, on a macro basis. History would suggest that is the fact, and we see no reason that would not change. Thomas J. McInerney: The only thing I would add is, specifically in real estate, since you mentioned that, real estate obviously is impacted by overall interest rates and the real estate economy. However, what we have seen in the past in real estate cycles is in a down-market, leaders consolidate and grow share, and our share is so small in that business that we clearly hope to grow it. We are in the very early days of that particular business.

I think the important thing, and I will try and not take all the time to do one question, I think the important thing about the company is that because it is this interactive or interrelated conglomerate, unlike other multi-business businesses, they really do relate to each other. Yet, during truly diverse and distinct segments of the economy, and they all have their own cycles. We have had a bad management patch in HSN. We made a change. I think, as Doug spoke earlier, we are on the right course there. We certainly have turned around Match. Match is now, as Doug also said, is not a turnaround, it is just really a growth story. I think you are going to have -- the good thing here I think is, at least the model is, you have multiple scenarios all whirling around, conservatively managed, so I think that no matter what happens -- I mean, if it is going to be a bad economy, it is going to affect everything and everybody, but I absolutely believe that we will get through anything better than most. I think in normal conditions, as we go and as we continue to get better at operating and executing, then I think we have, frankly, a better chance than most. I hope that helps answer this a bit for you, Safa. Safa Rashtchy - Piper Jaffray & Co.: It does. It is helpful. A quick follow up on Ask. Tom, can you give us some metric, because as you know, the comScore numbers are highly suspect. Can you give us a sense, from your own [inaudible] in terms of the query growth, and how has monetization trended? Thomas J. McInerney: Safa, as you said, the comScore numbers are very different than ours and we do our best to try and reconcile them, but we are seeing really good query growth, as well as good monetization growth. At ask.com, really the flagship property, we are seeing consistently now query growth year over year in excess of 40%. I think that is what is driving those particular share statistics in comScore -- seeing good query growth in other properties of ours as well. At the same time, we also saw good monetization, up low double-digits on a revenue per query basis in the second quarter.

Thank you. Anthony Noto of Goldman Sachs, please go ahead with your question. Anthony Noto - Goldman Sachs: Barry, given the penetration of broadband users in the United States today, there has always been this opportunity longer term to better leverage the HSN brand and the archives of video content you have by using that content online to attract either new shoppers or greater frequency of shoppers through the distribution channel, the Internet, and delivering that video. When I go on the site today, I can really only access HSN TV live. I cannot go into the archives and pick whatever product that I want. Could you give us a sense of how that strategy is going to evolve over the next couple of years? Will you get to appointment-type of video delivery on products, so that every product listed has an archived video? What kind of traction have you seen today in that area? Finally, how will you market it to get more traffic there? Thank you.

It is early days. I think we have two experiments going in what you would call interactive TV. I think that is probably the next, possibly the next step before you get really rich archival retrieval and appointment viewing and things like that. Inevitably, of course, it is going to happen, as the data possibilities grow, there is no question but the video is going to be easily retrievable and you will be able to get exactly what you want when you want it from a whole array of things, all with video and instructions and all the stuff that home shopping has been known for historically. In ITV, the most [inaudible] experiment, which is with Cablevision, which is the idea that you essentially, on a big screen, just like you are watching today, you like a product, you point and click and it is delivered to you within the next day or so. You do not have to phone order, you do not have to do anything. It is I think the most natural evolution. I do not know, Tom, if you have the stats, but -- and it is very early days here, but the amount of additional purchases and the amount of attention on this, the people that are using this, it is really surprising. Thomas J. McInerney: It is very early days, but we are actually getting some reasonable order volume. I think maybe a couple hundred thousand of revenue from it over a very limited -- very limited deployment in terms of subscribers. As Barry said, it is primarily in Cablevision, certain select New York DNA’s, and we have a small test going on with a Time Warner property in Hawaii. Our platform is ready. We are in conversations with all of the other cable and DVX providers. I think this is going to roll out over the coming quarters and years, and it is a very natural extension. The only other thing I would add, just back to the web, is beginning, I think it was a couple of months ago, we started capturing fully all of our live programming on a digital feed. So we are very, very close -- imminent -- to making available what you are talking about, which is full archival viewing of all live programming via hsn.com. That portion of the site, which is this week in review, if you go back today and just look at products, but in the future we will attach live video -- not live, sorry, but taped video to that, has always been one of the most popular. So the live video stream we recently upgraded in quality as well and that is seeing increasing traction. I think we are on the precipice, both through the dotcom video over the web, as well as the ITV platform, to real growth in interactivity broadly defined here.

As far as marketing, with search engine marketing, both paid and just optimized, I think that is going to be the best way to market these things. I think you are going to find, as you are able to get video, as you are able to get these products instantly deployed and as you get better at all these search processes for identifying things and promoting things through search engine marketing, I think it will have a natural, easy marketing progression. I do not think telling people about it is going to be a problem. Anthony Noto - Goldman Sachs: If I could just ask one other question about investment. A number of Internet companies have reported pretty strong robust growth in the quarter, but I think the thing that has been most surprising to investors, and to us, is the level of acceleration in capital spending over the next several quarters, even only here in the second quarter results. Ask is experiencing very strong query growth at this time. Do you think, as you look out 12 to 24 months, that you may in a position where you may have to make those same increased levels of capital spending behind Ask, post this initial share gains that you are getting from a re-launch of the product? Thank you. Thomas J. McInerney: It is a very dynamic area, and first of all, we are getting, as we said earlier, lots of query growth now. It was not like we had lots of excess capacity, so we are putting some new capacity in place for the back-half of this year and into next. It is a very dynamic area. I think it is a place where you can willy-nilly, if you will, pour lots of capital. We are trying to be very, very smart about it. We have a great team on it and we are evaluating all options for infrastructure in terms of working with partners -- buying, leasing, et cetera. I think there will be incremental infrastructure capital that goes beyond query growth but we are happy to have. It will more than pay for itself and it will not be currently as we see it, and it is a dynamic area, but it will not be some huge step function in advance of that growth, or not long in advance of that growth.

I think the important thing is I think you will see expenditures rising with sales, with revenue. We will husband it as best we can as we go. Other than some of the infrastructure, in terms of server [farms] and things, but other than that, it is not a wildly capital intensive area for us. We will continue again to put marketing -- I think we put marketing in much more targeted than in the, so to speak, in the first throw of it when we were really trying simply to establish the fact that Ask was a global search engine for everyone, rather than Ask Jeeves, for training wheel people. I think it will come in [train].

Thank you. Mark Mahaney with Citigroup, please go ahead with your question. Mark Mahaney - Citigroup: Two things, one just to clarify the comments you made on the lending margins in the back-half of the year. I think you were saying that margins would expand sequentially as we go through the back-half of the year. I just want to get a confirmation on that. Secondly, could you just dive down a little bit more on the international retail weakness that was greater than expected? Are there specific things you think you can do in the back-half of the year to improve the performance of that group? Thank you. Thomas J. McInerney: On the lending side, you heard it correctly. If you look at our margins, they were down a little over 10 points year on year, Q2 to Q2. We do not expect to see that type of margin contraction in the back-half of the year. We had very strong margins in Q3 and Q4, so we are not going to get to that level and we do not expect to get to that level, but I do not expect to see the 10 points of contraction as well. So that is saying the same thing as you said, kind of up sequentially, which is in line with the restructuring of the marketing costs and other operating costs when market trends became apparent. On international retailing business, it has been a big disappointment for us. We had pretty good performance in 2005, with accelerating growth throughout the year -- quarter over quarter, each quarter better than the last. We hit a number of issues this year that are executional as well as macro-environment, the least of these probably but in the mix, as I do not think we have gotten any help from the general retail market there. More importantly, we have been transitioning to a new distribution center. That has presented a variety of operational challenges, as well as some distribution issues and some very specific vendor and merchandise issues. The fact of the matter is, the business was not strong enough or well enough into its turnaround and overall execution level to withstand these particular disruptions, so we have to fix it and we have to get it back. We do not think it is a quick or easy fix this year.

Thank you. Our next question is coming from Paul Keung of CIBC World Markets. Please go ahead with your question. Paul Keung - CIBC World Markets: A question on ticketing and a question on the economy. On ticketing, now that you have launched ticket exchange and [ad placing], I guess it is [inaudible], curious, what is the size again with this market you are going after, both U.S. and internationally? What penetration rates are you trying to target over three years? At what point do you start really trying to drive the growth and penetration in what I think is, for you guys, historically been a very tough market? Thomas J. McInerney: Let me start with the aftermarket. On the aftermarket products, the market is very, very large. You can size it and it is a -- clearly not as big as the primary market. It is a substantial percentage of the primary market, depending on how you measure it. We have a tiny, tiny piece of that today. So we think there is plenty of growth. In terms of the share that we are after, there is certainly no target. All we say is when you consider TicketMaster’s advantages in terms of being the only one to authenticate a consumer transaction because of all of the bar coding equipment and the like that we have installed at venues, TicketMaster’s distribution advantage with the ticketmaster.com site, client relationships, et cetera, we think we have very, very natural advantages that over time will prevail and should lead to real market share opportunities. So there is plenty of runway and we are getting good traction there. We have now 44 teams using our team exchange product on in the sport side, and we are just getting started on the single ticket side, which is primarily a music application. Paul Keung - CIBC World Markets: At what point will you do a major branding of this product at a consumer level? Thomas J. McInerney: The focus is on getting the tickets accessed and enabled. Because TicketMaster has so much pull, it is like our position in the primary market side. We have 20 plus million uniques coursing through ticketmaster.com. We are not hurting for audience. So it is not so much about branding…

I think the branding is going to be TicketMaster. I do not think we are going to do anything. We have a rather strong brand name in TicketMaster. We have some other products, of course, but TicketMaster is the only thing that I would sink any teeth into in terms of future branding .

What you will find, just as you do today, over time you will go to the site to be purchasing tickets for whatever it is you are purchasing tickets for and you will see not only primary but you will also see secondary, and inside primary you will also see auctions. Those, as the inventory, the challenge as Tom alluded to, is simply getting more inventory and for us, we can only do that with the cooperation and the partnership of our clients. The great news is we are getting more and more every day. Paul Keung - CIBC World Markets: My second question on the economy. Are you actually seeing signs of weakness at the consumer level or anywhere [inaudible] outside the [inaudible]? Retail, for example? Specifically, what are you doing at the management team level to prepare you different teams for that, if it does happen in ’07?

First of all, we do not really see any negative signs. We are not going to predict the economy. A fool would do it. I predict global warming, but -- it is not global warming, it is global freaking hot! -- almost everywhere. That we can predict. As far as our prep, we are really conservative in terms of how we plan for things, so we are always going to have plenty of reserves. We are always going to keep things within bounds. We are not going to go over-gaffing, not relative to the price of oil but we are not going to push beyond what we think are tolerable limits and we will pull back whenever it is necessary and we can do it fairly quickly. We are not shy about being I think sensibly reactive about something this way comes.

Thank you. Justin Post with Merrill Lynch, please go ahead with your question. Justin Post - Merrill Lynch: Thank you. First, on HSN, can you talk a little bit about inventory levels? I notice they are down a little bit year over year, and how the linearity of the quarter went -- did you feel like June was better than April, since you last reported the quarter? Then I have a follow-up on your free cash flow. Thomas J. McInerney: Inventory levels were down. The number you are looking at on the balance sheet is a composite of a bunch of different businesses, but in fact at HSN, they were down quite sharply -- in fact, probably too much so…

Definitely too much so. Thomas J. McInerney: Definitely too much so? So one of the tasks of the new leadership team is making sure we have the right products with inventory…

Just a bit of insight here. One of the problems that we found we faced, really it began about a year ago, is that the previous manager of HSN got very risk-averse and really began to skinny down the inventory. Inventory is, of course, opportunity, if it is good. We went through -- which is really what I think more than anything hurt us -- we went through a period of about six months where we were inventory constrained. I think we are just now starting to come out of it, so I do not think that will be our problem. I think we now have a really good editor and a really good merchandising leadership, so -- I guess I have gone on too much about, so to speak, the inventory but it does relate to explaining a bit more context what has been happening with HSN over the last year. Tom, sorry, was there anything else? Thomas J. McInerney: To the second part of your question, I think you were asking about June, and what Barry said, June was better. It was markedly better than April and May. We are hesitating from drawing a straight trend line. I mean, in this business, you obviously get generally four weekends a month. Those are big days. You have specific vendors programming calendars and the like, so there is always, in any 30-day period, a number of things that affect it. The business did definitely feel healthier to us in June than it did earlier in the quarter, but that is what we know. You cannot extrapolate more than that than say it will help you. Justin Post - Merrill Lynch: On free cash flow, clearly ahead of our estimates. Do you still expect it to be down on a year-over-year basis, as you are up year-to-date? What drove some upside to your earlier comments earlier this year? Thomas J. McInerney: There are a number of moving pieces, and we have been working on all elements of that. We have some good tax effects where we got higher NOL utilization out of the Ask acquisition than we had planned on. When you do these things, you make an estimate because you do not know bids. A lot of NOL’s that we did not think had been utilizable, and we had gone after that and we got utilization out of some of those things. We have controlled capital spending in certain areas, a good job on working capital -- so it is really across the board, and a credit to our people who are all focused on this. In terms of the year-over-year numbers, if you look at last year’s number and there is this definitional thing we went through on last quarter’s call, where the 123R benefits are now excluded from that definition. If you back that out, I think we have a shot to be up year over year. That was $150 million of our roughly $700 million in free cash flow last year. With a solid back-half, we certainly have a shot. Justin Post - Merrill Lynch: Last thing, real quick, on Ask -- do you think you can get some pretty interesting margin improvement next year? I do not know if you are willing to talk about that, but do you think you are over-investing this year, relative to where you need to be?

No, I mean -- over-investing, I think what we are doing -- excuse me -- very early days, so far, so good. We have got very, very good query growth. We have not spent a fortune, but very good query growth. I would not make any predictions about margin expansion at this stage. This is a period when the smartest thing for us to do -- I think the great benefits of the kind of company we have is we are making we think really sensible investments in Ask because we think it is really worth the candle. If we can increase queries and increase the frequency within those queries, then we are going to have in the next -- I do not know, year, two, three, not beyond the horizon -- we are going to have a great business. To us -- I do not want to be redundant about it. I think we are on the right path. I would not either suppress or impress or push margins at this time. What we are pushing at this time is growth -- sensible growth, sensible expenditures, good returns, good revenue gains.

Thank you. Scott Kessler with Standard & Poor’s Equity, please go ahead. Scott Kessler - Standard & Poor's Equity: Thank you. You talked about prioritizing -- well, at least you implied prioritizing organic growth more over the last several quarters. I am wondering if you could talk about efforts to garner both revenue synergies as well as cost efficiencies. Thank you. Thomas J. McInerney: We are attacking this in a number of ways. On the revenue side, I think the thing we will continue to focus on is how all of our other properties can take their enormous audience and leverage that to the benefit of ask.com in helping to grow query growth. We have taken a very good first step in that regard by getting the ask.com search box put across all of our sites. It is generating, already, a meaningful number of queries for Ask. Now, you will continue to see us, as we are more centrally organized, in my new role, you will see us continue develop cross-business deals with all the sites. We will continue to do that. The big focus, though, that we are going to do is on deploying best practices, as I mentioned, and really finding ways that we can deploy something that is going great in one area, whether it is online marketing, whether it is direct mail, whether it is offline marketing, and try to deploy that across the company. As I have said, we are systematically doing that. Where you will see that show up over time is not in revenue from cross-company deals but in the revenue and the profits of the individual businesses themselves. On the cost side, we have definitely made a lot of strides in that area over the last few years and that just continues. Those efforts, by streamlining and centralizing the processes by which the capital expenditures get approved, really gives us the ability to leverage the buying power of IAC with outside vendors and also to hold costs under control. One of the things I have been very, very pleased with in this new role is how willing and able and enthusiastic all of our businesses have been, and really been cooperative in this process and it is starting to yield real results. Scott Kessler - Standard & Poor's Equity: If I could follow up, is it fair to say that, in terms of driving increased margins, maybe best practices and cost efficiencies are having a greater impact and are expected to continue to have a more significant impact in revenue synergies over the foreseeable future? Thomas J. McInerney: I think you have to start by looking at the past and then go forward. In terms of the past, those revenue synergies have had very small impact. It starts with generally attractive margin characteristics of our businesses. The places where we are operating generally, if you get good revenue growth, you are going to have opportunities for margin, tend to be good operating leverage, operating margin businesses and that certainly is a key priority as we go forward, to continue to drive revenue, drive share and to bring what we can to the bottom line. We had a great year in that regard last year, Q1, Q2 -- in any given quarter, it may vary but that is the key focus. I think adding to that, as Doug said under the new structure with our new focus, we think there will be opportunities to do that from a revenue and cost synergy. What the relative weight of those things are as they affect margins, who knows? We are going to focus on all of them and we will get it where we can.

Thank you. The next question is coming from Robert Peck with Bear Stearns. Please go ahead. Robert Peck - Bear, Stearns & Co.: Barry, we have had a conversation with some marketers recently and they had a lot of praise for Citysearch and promise of Ask going forward. I guess if you look at Ask Jeeves, how do you look at long-term differentiation? When will we see more local integration with your great database there with Citysearch? Can we have any more data around some specifics with Ask, such as click fraud you are seeing, click-through rates, demographics of the query growth you are seeing, that type of stuff? Thank you.

First of all, we do not expect very much from Ask Jeeves since Mr. Jeeves has departed, but there is a current, big priority project, which is to integrate Citysearch and Ask much, much more fluidly. There is no question we have the best local content. We have it in breadth and depth, and the quality of the local content I think puts anybody else locally to shame. Getting that content again perfectly fluidly into Ask is a project that is high up on the list. I would say that in the next four months, maybe six months, max, it ought to be out there and fairly smooth. In terms of metrics and things and click fraud, we suffer click fraud to the degree anybody else suffers it now. Really this is, in this case, because Google is our ad network, they take responsibility for it. It is there, and it is not a major, major part of the stream, but it is certainly an effect. I think there are mechanisms now getting deployed that are going to make it even less. On other metrics, I do not know what we have to say other than what we said, which is the only metric that counts, two things count -- how many queries and how are we fulfilling them, how many of them do we cover with advertising? It is really a huge change. One year ago we had 10 links, sponsored links, paid links on the page. We thought that was a bad consumer experience, we took it down to three. We did it with the argument that in doing so, it would take some time but our revenue would actually increase, not decrease, even though we had less than a third as many opportunities. We have achieved that in a pretty short period of time. The metric to pay attention to is queries, frequency and coverage. In all of those, coverage percentage has basically remained at a pretty high level, in the 60’s -- is that right?

Higher than that on ask.com.

What are they? Do you know, Tom? I don’t really know. Thomas J. McInerney: I think up in the 80% range.

In coverage? Thomas J. McInerney: Yes.

That is then a big increase, but certainly queries and revenue, all of the key issues, drivers, metrics for ask.com are more than we had wanted and we actually had pretty aggressive goals. We are 10% ahead of our plot year to date. So, so far okay. Again, that brass ring has certainly not been achieved, meaning significant revenue and share that I think we are going to get over the next several years, but we are on our way. Robert Peck - Bear, Stearns & Co.: One quick follow-up, if I may -- could you elaborate a little bit more on what is going on with Ask in the U.K.?

The U.K., a number of factors. First of all, the U.K. was very over-monetized. The stand-alone Ask business, before we bought it, Ask was doing a lot of revenue and it was one of the key things where they met their quarter. They were -- I do not know how many links they had on a page, but I do not think they had anything but paid links. We took that down recently. That really hurt revenue. We also had a number of problems in the market that were -- some were infrastructure, some were other marketing issues, et cetera. Recently, we have had real improvement in the U.K. It is not back to anything that you would call robust, but it is certainly on the way. We changed the management. We have really cut fat in various areas that were really inefficient -- big, big emphasis that Jim Lanzone, who is the CEO of Ask, has really put on it, but to early pretty good results, pretty good turn, but nothing to shout about yet. Thomas J. McInerney: And put in place an organizational structure where I think it will be much easier to move products and technology from the U.S., [inaudible] reports to Jim, move on to the [multiple speakers] business.

How much -- maybe one or two more questions. Next question, please.

Michael Millman with Soleil Securities, please go ahead with your question. Michael Millman - Soleil Securities: Thank you. Two questions, one is on the real estate. You said you have 130 brokers now. Can you give some idea of where you are headed? It does certainly look like it is general brokerage, in other words, most brokerage today use the Internet extensively to bring in prospects. Secondly, on vacations, which looks like a great business, time share is growing about 15%. You are growing the business about 5% -- why the disconnect? How do you [fix] that?

On the real estate business, first let me just highlight the strategy, because it is certainly anything but traditional. The strategy in real estate is first to centralize the marketing and customer origination. Typically, most brokers effectively outsource the customer acquisition to local real estate agents and then pay that agent effectively 80% of the commission income, leaving not very much for the broker and also having very large bricks and mortar costs. What we have done is effectively had almost no in-market offices and recruited agents on the basis that we are going to substantially drive the leads into the market. We drive the leads from realestate.com into a call center and then immediately, effectively hot-transfer those leads to an agent in the market on a revenue split, which keeps much more for the house, so to speak. The agent gets a great source of new leads and they still make a lot of money because they do not need to go out and prospect for business as much as they have had to in the past. Now, they still can but we think we can do that very efficiently. So it is a very different business model. As I said, it is growing. It is up to 130 agents already. The nice thing is these are independent contractors, so while it does not really “cost” you anything to continue to add new agents, clearly there is some cost in infrastructure as you add new markets, but it is fairly small. As far as specific plans, I would say we are not going to give specific numbers of agent counts that we would hope to add over time, but we would expect it to be robust as profits continue to generate here. One thing I would add is we are seeing great agents actually want to come to this platform. We have got fantastic tools, fantastic technology, obviously great marketing and very good training and development for agents, which we think is unique in the industry and that is why they are coming to us. Thomas J. McInerney: Michael, on vacation, I am not sure what statistic you are looking at. It may be a dollar-based statistic. We tend to see the market growth in the U.S. in terms of number of owners, which is really the relevant piece for us, in the mid- to high-single digits, usually closer to the mid. Our data on that suggests that we are at least holding if not gaining a little bit of share with mid-single digit volume growth in terms of number of new subscribers in the lot. If you measure on dollars, of a dollar value of transactions, then that may not necessarily translate straight to revenue, since a good portion of our revenue is subscription fee based.

We will make this the last question.

Imran Khan with JPMorgan, please go ahead. Imran Khan - JPMorgan Chase & Co.: A couple of questions. First, Doug, I think last quarter you talked about your customer acquisition cost for Lending Tree grew almost 50 percentage points year over year. I was wondering if you can give us some sense of how the customer acquisition cost for Lending Tree was in Q2, and how should we think about it the second-half? Clearly you are expecting margin expansion. Secondly, Barry, in terms of Ask Jeeves, a two-part question --

I am sorry, but you know -- it is not Ask Jeeves. I do not want to show any irritation here, but my God, please. Imran Khan - JPMorgan Chase & Co.: I apologize.

Do not apologize [multiple speakers] -- do not apologize. Just go on ask.com, use the service, and then you will know it is not anything but ask.com and you will be a happy person. Sorry, what is the question? Imran Khan - JPMorgan Chase & Co.: Okay, going back to Ask, two-part of Ask: monetization growth was up double-digits. I think you are talking about coverage being 80%. I am trying to get a better sense -- is the coverage driving the monetization growth? Secondly, our understanding is that on the employee retention side, that is clearly a job market that is very tight, the West Coast. What are you seeing in terms of employee retention and hiring trends? Thank you. Thomas J. McInerney: Let me start, and then I will kick it to Doug on the lending side. The marketing costs were up in Q2 year over year, but not as much as Q1. I think in Q1, we were something like 10 points of marketing costs relative to revenue year over year in terms of an increase, negative variance. In Q2, that was probably closer to 7 points, but we still saw a marketing cost increase year over year. Our cost per QF was probably up about 12%. When you combine that with the lower close rate, there is no question costs per customer acquisition are growing even in excess of that.

Overall, the thing to focus on is really the interplay between customer acquisition costs and revenue per customer. You could, as you add on more marketing, you move by definition into channels which cost more on a very incremental basis. That said, what I would say on Lending Tree, they have done a really fantastic job this year, substantially improving our online marketing efforts on both broad reach for display advertising, and in particular in search marketing, where we are doing much better than we have in years past. Lending Tree, prior to last year, was very, very focused on offline marketing and not as much focused on online marketing. They brought in a great team, really beefed up our efforts in that regard, built on some of our successes over the past, and what we are seeing is that the Lending Tree brand, since it is so well-known offline, can really pull through online. They have also made a number of changes to the site which help pull customers through the process more easily.

On Ask and employee retention, California is of course a tough market, but we have a really great leader in Jim Lanzone. He has been able to attract, keep, et cetera. Then, we operate in such great hot spots as Pisa, Italy, Piscataway, New Jersey, White Plains, so we have people everywhere. In some of the places, I think we are probably a bigger factor than we would be the true hot spot of California.

I think the last bit of your question was in terms of is coverage driving a higher revenue per query, the answer is it is part of it. We are also seeing costs per click up. Importantly, I think there are a couple things behind this. One is some of the macro things that are going on in Google’s advertising business generally, which is obviously supporting our paid advertising system, but also with the ask.com re-branding, the aforementioned ask.com re-branding, we think we are really shifting our mix of usage towards more commercial categories, and that is helping us in the [inaudible] process as well.

Ask used to be very much research-oriented, as its audience and very large audience of younger people, looking to research various things. One of our biggest thrusts was to get Ask to be used for everyday things by a very broad demographic. That is beginning to take place, so that shift is happening. I think that is it. Well, that is not it, though that we have gone through an hour of questions. We hope that, even though -- well, we hope everybody is cooling off wherever they can for the rest of the summer. We will be back with you hopefully, if it ever gets colder, in a few months. Thanks very much for joining us today and we will see you soon.