Oct. 12 (Bloomberg) -- To Internet surfers, there's a world of difference between LendingTree.com, a mortgage vendor, and CollegeHumor.com, which features racy jokes and topless women.

Not to Barry Diller, the media billionaire who in August added CollegeHumor to IAC/InterActiveCorp, his stable of 61 brands including Match.com and HSN, the home shopping channel.

``It's all content,'' said Diller, 64, who ran Paramount Pictures and founded the Fox TV network. ``I've always believed that if you have audience, money will follow.''

With CollegeHumor, Diller is returning to media that make money from advertising rather than transactions such as on IAC's LendingTree. The latest acquisition is part of his new programming unit that will debut three more Web sites this year. To compete with Yahoo! Inc. and Google Inc., he may have little choice. IAC ``has to be a buyer'' of sites as ads move to the Web and online visits begin at venues like MySpace.com instead of at search engines, Internet consultant Chuck Richard said.

``They have a hole there, and they will not achieve the growth rates of companies they are compared to unless they get a piece of this,'' said Richard, vice president of Outsell Inc. in Burlingame, California.

Yahoo and Google have embraced a new wave of sites that depend on user-generated content. News Corp.'s MySpace lets users write about themselves, post photos and link to friends. Google, primarily a search engine, announced this week that it was purchasing YouTube.com, a repository of millions of videos contributed by users, for $1.65 billion.

Freestanding Entities

Michael Jackson, who ran the USA, Sci Fi and Trio networks for Diller, has a broad mandate as the head of IAC's programming unit to find or develop sites that will attract audiences in fields like entertainment or comedy. Unlike other Web information companies such as Yahoo, which folds its products under one brand, IAC's sites will be freestanding entities with a loose affiliation, Jackson said.

``Think of it like a series of magazines, a portfolio of content businesses like Conde Nast that have a strong relationship with their audiences,'' he said.

Conde Nast, a unit of the Newhouse family's Advance Publications Inc., has a stable of magazines ranging from GQ and Vogue to The New Yorker and Wired.

IAC's new properties may also send traffic to the search site Ask.com. Diller spent $1.96 billion to buy Ask Jeeves Inc. in 2005, then invested in the new name and design. The company also today introduced Ask.com Mobile, a search service for cell phones. Like Google, Ask.com earns money from advertisers when users click listings that lead to their Web sites.

Advertising Revenue

IAC's media & advertising division, which includes Ask.com and Citysearch, reported revenue of $131 million in the second quarter, a fraction of IAC's $1.61 billion in total revenue. The division had an operating loss of $11.3 million in the period as it increased spending on marketing. IAC's total earnings dropped 91 percent in the quarter after the sale of entertainment assets the year earlier.

Investors are wondering how Diller will tie all the Web pursuits together.

``CollegeHumor, by its very title, is a niche site and they'd have to acquire dozens of them to make a difference to their financial statements or strategy,'' said Darren Chervitz, director of research at New York-based Jacob Asset Management, which sold its IAC stake in June and July. ``It's a bit hard to believe that they are going to become an operating company.''

IAC paid approximately $20 million for a 51 percent stake in CollegeHumor's parent, New York-based Connected Ventures LLC. The site claims 6 million unique visitors a month and sells ads to Yahoo and Viacom Inc.'s Comedy Central.

Like TV Ads

While Diller said the initial investment on the programming division will be small, sites can produce ``strong revenue relatively quickly'' once the audience arrives.

Technology has evolved to the point where Web sites can attract and sustain audiences that watch ads like on television, he said.

``Most of the tracks for interactivity have been laid, and I think the next five years will be the arc of development,'' said Diller, who sold IAC's interest in NBC Universal last year for $3.4 billion. ``We know there will be lots of experimentation, but for a company with $6 billion in revenue and a healthy cash flow, this is exactly where we should be putting our money.''

Shares of New York-based IAC have climbed 18 percent in the past year, better than the 1.1 percent decline in the 106-member Bloomberg U.S. Internet Index.

Very Short List

IAC Programming's newest service is homegrown and small by comparison to some of the sites on the market. Very Short List, now in public beta, is an e-mail service with an associated Web site that features a single daily recommendation for a film, TV show, book, magazine article, Web site or compact disc.

Jackson is ``often zigging where people are zagging,'' said Lauren Zalaznick, president of NBC Universal's Bravo network, once part of Diller's holdings. ``He sticks to what he believes is interesting to himself. It's a game of odds, and he's often right.''

To contact the reporter on this story: Oliver Staley in New York at ostaley@bloomberg.net.

Last Updated: October 12, 2006 17:14 EDT