Tom McInerney - CFO Barry Diller – CEO

Jeetil Patel - Deutsche Bank Justin Post - Merrill Lynch Robert Peck - Bear, Stearns & Co. Mark Mahaney - Citigroup Douglas Anmuth - Lehman Brothers Jennifer Watson - Goldman Sachs Jeff Schulten - Netexas Imran Kahn - JP Morgan Aaron Kessler - Piper Jaffray Jeffrey Lindsay - Sanford Bernstein Scott Devitt - Stifel Nicolaus Heath Terry - Credit Suisse

Good morning ladies and gentlemen, and thank you for standing by. Welcome to the IAC fourth quarter earnings conference call. (Operator Instructions) This conference is being recorded, Wednesday, February 6, 2008. I would now like to turn the call over to Tom McInerney, Chief Financial Officer. Please go ahead sir.

Thank you operator, and thank you everyone for joining us today. Joining me on the call is our Chairman and CEO, Barry Diller. During this call we may discuss our outlook for future performance. These forward-looking statements typically are preceded by words such as we expect, we believe, we anticipate, or similar statements. These forward-looking statements are subject to risks and uncertainties, and our actual results could differ materially from the views expressed today. Some of these risks have been set forth in our Q4 2007 press release, and our periodic reports filed with the SEC. 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. We're now very much in a transitional phase as we plan and execute the spin-off transactions. I will update you on these efforts in just a few moments, but first I want to touch on the operating results for the fourth quarter. I'll go through this by focusing on each of the five companies to be established by the spin-offs. First to retailing. Turnaround at HSN is in full force, with revenue growing 8% in Q4, excluding America's Store, and profits growing proportionately. Drivers of the turnaround remain the same, as improved sales efficiency across the majority of product categories. Gross margins were down a quarter of a point, due almost exclusively to pressure on that shipping revenue, as costs continued to rise, and we offered more shipping promotions to drive customer engagement. We continued our progress in managing margin and inventory levels. We enter 2008 optimistic, albeit of course a bit cautious, given the macroeconomic environment, but we believe we are better positioned than last year to see our strategies take hold, and realize top and bottom-line growth. Catalogs business had a challenging fourth quarter. This was a combination of specific merchandising and execution issues at certain titles, plus a very different macro environment for retailers, particularly in the home category. Overall, sales were up slightly, but profits were down materially as margin rates were negatively impacted by heavy promotional activity, given the environment, and operating expenses were slightly higher due to investments we made before the environment worsened. We're spending the first quarter completely recalibrating our 2008 plans for this business. Inventory purchases and expenses have been reduced, capital spending plans have been cut by one-third, and merchandising and mailing strategies are being revisited. It's premature at this stage to translate these actions to figures, but I think at least the first six months of the year will be a challenge in this business, and we'll evaluate from there. Now to Ticketmaster which once again posted record worldwide ticket volumes. Revenue for the quarter grew 27% on international ticket sales growth of 30%, and domestic ticket sales growth of 7%. Concert tickets represented 51% of the ticket mix, relative to 49% in the year-ago period.

Ladies and gentlemen, one moment please, we are experiencing technical difficulties. The conference call will resume momentarily.

..market, by closing the Paciolin acquisition in January. This last month, we also announced the acquisition of TicketsNow in the US, and GET ME IN! in the UK. Additionally, Ticketmaster recently signed secondary market deals with the NFL, NBA and NHL, and extended its contract in the primary market with MLB. I said on our last call that while it would be unreasonable to expect to replace the Live Nation volume we will lose in 2009 with any one action, it would be a multi-pronged effort. We think these actions, coupled with our ongoing efforts to extend Ticketmaster's lead on a global basis, puts us in a strong position for 2008 and beyond. We do, however, expect Q1 to be our toughest comp of the year. As you'll recall, it was a very strong quarter a year ago, pulling some volume from the second quarter. As such, with visibility into one month of the quarter, growth in the first quarter is unlikely, but we will have better comps after Q1. Turning now to LendingTree. The business continues to operate in a difficult mortgage environment, and the fourth quarter we took a $476 million non-cash charge related to the write-down of goodwill and intangible assets for the lending business. For the quarter, revenue declined 58%, with the drivers of this the same as they have been all year. Profit declines reflect 11 million in restructuring costs, and an 8 million provision for losses on previously sold loans. In 2007, we shrunk the LendingTree workforce by 57%, removing over 110 million in annual non-marketing expenses. We also reduced marketing expenses substantially. Breakeven is the near-term goal while we await better market conditions, and in Q1, we expect to be closer to that point. Fed has cut rates 175 basis points since our last call in October, and we are seeing some encouraging signs on the refi side. In January, refi QF volume increased year-over-year, and we had a number of days of record refi QF growth. We proceed towards the spin under the assumption that at the time of the transaction, the lending business will be fully stable and ready to chart its course as a stand-alone public company, having positioned itself to capitalize on the inevitable turn in the macro market. Turning now to Interval. As we prepare for the spin-offs, we are excited about Interval's prospects as a separate public company. In Q4, Interval grew revenue and operating income before amortization 35% and 12%, respectively, with the inclusion of the acquired ResortQuest Hawaii in the current period, but not in the year-ago period. The primary reason for profits growing less quickly than revenue. Still on Interval, I want to spend a moment to explain an accounting adjustment we made during the quarter, which is set out in detail in the earnings release. Prior to the fourth quarter, Interval improperly recorded renewal revenue and certain directly-related costs, beginning in the month a member renewed his membership, rather than beginning at the actual start date of the renewal period. Accordingly, revenues and profits were overstated from Q3 2002 through Q3 2007. While we were extremely disappointed this mistake was made, it impacts in no way the value of the business. This is timing only, cash flow was exactly as recorded, and there is no customer impact at all. Now to what will remain following the spins. The New IAC, which will contain our Media & Advertising businesses, Match, ServiceMagic, Entertainment and our emerging businesses. Overall, New IAC results in the fourth quarter were significantly impacted by challenges in our Entertainment business, as well as transaction expenses and certain non-recurring items in our corporate expense line. We think this belies the real growth in New IAC. For example, for the full-year 2007, revenue and OIBA grew at a strong double-digit rate. By business within New IAC: Media & Advertising grew revenue 42%, and OIBA 55% in Q4, on the strength in our Fun Web products business, Ask.com, our distributed toolbar and advertising businesses, and Citysearch. The quarter was not impacted by our new Google contract, which was effective January 1 of this year. One note on this contract which I mentioned when we announced the arrangement, but I wanted to highlight again. The contract provides us with better economics, while simultaneously better aligning our interests in this syndication area with Google. This means that over the course of 2008, a greater percentage of our revenues will come from the higher margin proprietary side of the business, and a lesser percentage from the lower margin syndication business. Net-net, this will be good for profit growth, but it will lead to optically unimpressive overall revenue growth for the coming year, with this effect beginning in Q1, and being fully effective in Q2. We'll walk you through it each quarter after we report, but we didn't want anybody to be surprised by this. Turning to Match, which grew revenue 14% in Q4. As we told you on our last call, we shifted marketing spend from Q3 into Q4, while also increasing the amount we traditionally spend at the end of the fourth quarter in domestic and international markets. As a result, OIBA for the quarter was flat, but we completed a very successful full year, with OIBA growth of 24% in 2007. We expect OIBA to increase only slightly at Match in Q1, as we continue to market our Match and Chemistry brands aggressively on a global basis in this seasonally important quarter. At ServiceMagic, revenue grew robustly, up 43% year-over-year, but profits declined as we continue to invest in sales-force expansion, and experiment with offline advertising to drive better awareness of this business. During the quarter, ServiceMagic did experience some of the effects of a housing and consumer spending slowdown, with slower growth in non-essential home repairs and improvements requests. As a somewhat new business, it's difficult to say at this point how economically sensitive the business is. It's clear that it's of great consumer value and has strong long-term growth prospects, and as such, we'll continue to invest in it, which may lead to profit declines in Q1, if current macro trends persist. Our Entertainment Business remains challenged, and experienced declines in the core fundraising channels during the quarter. As a result, we've taken a $57 million charge on this business relating to goodwill and intangible assets, and are exploring all strategic alternatives to the business. One note on our emerging businesses, which includes Gifts.com, Pronto, CollegeHumor, GarageGames, Primal Ventures and a number of our other early-stage companies. We continue to see attractive long-term opportunities we believe worth funding, but we expect our 2008 losses in this area to approximately double from the $12 million in 2007, as these are early-stage. Corporate expense increased during the quarter, reflecting $4.1 million in spin-off transaction expenses, and a $2.7 million increase in payroll tax payments related to the exercise of options during the period. 2008 will be a transitional year for us as it relates to corporate expense. We will have transaction-related expenses flowing through that line, and we'll have significant resources devoted to the spin-off. Past those transactions and beyond, we'll seek a reduction in corporate expense consistent with the smaller footprint of New IAC, but it's premature to quantify at this time. I will remind you that in 2007, we made a number of minority investments in early-stage businesses, which are in investment mode, and are likely to adversely impact the below-the-line figures. These investments were made subsequent to Q1 '07, and will thus affect the year-over-year numbers in Q1 '08 by a few million dollars. Those investments include our stakes in Frontline, the HealthCentral Network, Medem, and our joint venture with Dow Jones, called FiLife. Turning now to the balance sheet. We entered the year with $1.9 billion in cash and securities, and pro forma net cash and securities of $1.1 billion. We did not repurchase any shares during the quarter, but did repurchase 6 million shares at $24.25 per share in a private transaction from one large holder in January. Additionally, the previously announced acquisitions of Paciolin, TicketsNow and GET ME IN!, and our investment in the HealthCentral Network, all of which have closed or are expected to close in Q1, represent an aggregate use of cash totaling approximately $450 million. Free cash flow for the year was $428 million, $136 million lower than in 2006, due to lower operating profits and higher cash taxes paid. You'll recall from earlier comments that a portion of this delta was related to the timing of certain tax payments. Effectively we were able to defer approximately $43 million of tax payments from 2006 into 2007. Adjusting for this timing effect, free cash flow was still down, albeit slightly less than OIBA, as we were able to reduce some capital spending and manage working capital. I mentioned Q1 trends a handful of times today, and as a result of some of these discrete issues, it's not expected to be a real growth quarter for us. As we look into Q2 and beyond, we expect a resumption of double-digit growth. In particular, we look for our Media & Advertising, Ticketmaster, Match, and Interval businesses to have good growth, and of course, we'll begin to comp against prior year quarters in lending and real estate, which reflected market realities. We remain generally on schedule for the spin-off transactions, and are deep in the planning and execution stages of the process. The timing remains roughly consistent, as we have previously discussed, and we'd expect to complete them in late in the second or in the third quarter. And with that, I'll turn it over to Barry.

Good morning. We had a tough fourth quarter with both good and bad news for a mix of reasons that’s already been covered by Tom. For those of us who work in the company, what the quarter was primarily about was intensive planning for the spins, their organization and their strategies. That work’s gone extremely well. We are doing every right thing in pursuing the course of splitting IAC into five parts. These companies and their managements will be far better served being solely focused with independent boards that can directly supervise their progress. I can’t imagine a better scenario for shareholders and let me tell you specifically why. HSN has definitely turned the corner in operating with consistent skill over the last month in every area of its operations. Mindy Grossman is a superb executive fully capable of leading a public retailing company. Ticketmaster as Tom just told you has just completed the quarter with record worldwide ticket sales. It’s just announced a very strategic acquisition of tickets now, which is the number two player in secondary ticketing. It has a critical number of initiatives its undertaking as the live event industry evolves and has some fine management team under Sean Moriarty its CEO. LendingTree, now back under the direct operation of Doug Lebda, its founder, it's slimmed its business down to meet the demands of the turbulent mortgage and real estate markets and I have no doubts – none – that LendingTree is going to emerge from the current mortgage mess. Its brand has lost no equity it still gets a huge number of loan requests and as I’ve said to Doug, whatever it comes out at as a public company is going to provide a lot of wealth creation for those that have invested. Interval is a jewel of a company; it’s executed flawlessly for 30 years and will continue to do so with Craig Nash as its leader. And now let me talk about what we call New IAC. Last week we had an all day planning meetings for the strategy of New IAC. It was nothing but exciting and that’s because of our much naturally integrated 30 brands, a good amount of cash and tremendous enthusiasm for all the future opportunities, known and unknown. With the continued growth of queries at Ask, big increases in distributed tool bars, more subscribers at Match and abundant promise from ServiceMagic and our emerging businesses IAC is going to be a very compelling, high growth company for investors. As for the litigation it is of course an unfortunate situation. We organized the process in such a way where no harm would’ve come to Liberty prior to the court resolving our dispute. So, I do wish Liberty hadn’t raised the roof on this in such an aggressive way, but they have and while the court decides this matter, I’m going to do everything I can not to let it become a significant distraction in the running of the businesses. During this period we will operate the company with as much focus as possible and I do believe we will prevail as the course we’ve been recommending is in the best interest to shareholders. Responding to the many false allegations in the litigation is just a pointless exercise. All the directors including Liberty's approved the spin concept and nothing that has happened or is likely to happen ought to deter that very right course. So with that operator let’s now take questions.