IAC Bets Curious Teens Can Boost Sales With Ask.fm Deal

Billionaire Barry Diller is betting that smartphone-tethered teens can stem falling sales at Ask.com by acquiring Ask.fm, a social network that lets users pose anonymous questions.

Terms weren’t disclosed in a statement today on the deal. Diller’s IAC/InterActiveCorp (IACI), the parent of Ask.com, gets Ask.fm’s 180 million unique users a month in more than 150 countries. Ask.com seeks to answer questions in Web searches using natural language.

“It’s a natural entry into a market segment and platform where Ask.com has been looking to expand,” Doug Leeds, the unit’s chief executive officer, said in the statement.

IAC, based in New York, is seeking to expand Ask.com’s offerings to reverse a sales decline. Revenue at Ask.com has fallen the past two quarters from a year earlier after the company had to adapt to Google Inc.’s recalibration of its algorithm for the prices set by its advertising services.

Identity-free social networking has grown in popularity among millennial smartphone users, with the rise of anonymity tools from Secret Inc., Whisper and Yik Yak. Ask.fm has drawn a dedicated base of users who raise questions they wouldn’t feel comfortable asking if they had to identify themselves.

The anonymous sites have come under fire for being vehicles for bullying. To ease those concerns, Ask.com said it’s working with New York Attorney General Eric Schneiderman and Maryland Attorney General Doug Gansler to develop ways to protect users.

While Ask.fm investor Rubylight will keep a minority stake in the business, the company’s founders will no longer be involved in any way, Ask.com said.

Diller, 72, has expanded IAC with bolt-on acquisitions such as in 2012 of About.com in 2012 for $300 million and last year’s $80 million purchase of ValueClick Inc. websites including Investopedia and Coupon Mountain.

IAC rose 1.3 percent to $65.62 at 11:32 a.m. in New York. The shares had slid 5.7 percent this year through yesterday.

To contact the reporter on this story: Alex Barinka in New York at abarinka2@bloomberg.net

To contact the editors responsible for this story: Sarah Rabil at srabil@bloomberg.net Crayton Harrison, John Lear

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