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Barry Diller’s IAC/InterActive said Monday it had taken a 12 percent interest in global hospitality and entertainment company MGM Resorts International. IAC estimated the stake’s value at $1 billion, making it a minority investor.
Diller, who serves double duty as chairman of the board and senior executive of IAC and Expedia Group, has been leading a reorganization of IAC, a New York-based conglomerate. IAC is known for its creative investments at the nexus of technology, media, and commerce.
The online gaming component of MGM clearly stirred an interest for Diller.
“What initially attracted us to MGM, besides its leadership in leisure hospitality and gaming, was an area that currently comprises a tiny portion of its revenue – online gaming,” said Diller in a statement.
“We believe MGM presented a ‘once in a decade’ opportunity for IAC to own a meaningful piece of a preeminent brand in a large category with great potential to move online,” said the company in a letter to shareholders.
IAC argued that MGM’s current online gaming revenue is “so small that it rounds down to zero.” IAC said
MGM Resorts International said in late July that acting chief executive officer Bill Hornbuckle and longtime company veteran would take the top job permanently. The company reported results last week, saying it had better-than-expected June despite bettings in its Las Vegas properties being down 63 percent year-over-year. (MGM Resorts runs about one out of three the Strip’s available rooms.)
A Large Bet for IAC
Barry Diller, Chairman and Senior Executive of IAC and of Expedia Group. Source: Expedia Group.
The casino and hotel operator said it is better placed than rivals to having in the past 18 months sold nearly all of its resorts in a sale-leaseback arrangement that has made billions in cash available.
IAC has typically owned asset-light, global internet and media brands, such as Expedia in the past and its current companies Vimeo, a video platform, and ANGI Homeservices, owner of home improvement media brand Angie’s List. But regulations for gaming in the U.S. and some other jurisdictions require a company to have a physical presence. So IAC has made an exception for MGM Resorts, which is best-known for having a large real estate footprint.
“Similar to Disney’s advantages over pure-play streaming companies with an iconic brand and multiple avenues to monetize the same intellectual property … , we believe MGM also is an aspirational brand, which could be delivered with daily accessibility and offer gaming consumers (including the 34 million M-life Rewards members) a wider range of services, both physical and digital, than any competitor,” IAC said. “Our history in driving off-line to on-line conversion gives us confidence in the path.”
Photo Credit: The Bellagio Hotel in Las Vegas, New Mexico, is part of MGM Resorts International. MGM Resorts International
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