• by Wayne Friedman , Staff Writer, June 9, 2005

News that Barry Diller's company, IAC/InterActive Corp., is selling back its 5.4 percent stake in Vivendi Universal Entertainment (VUE) to NBC Universal must be a coincidence -- an advertising market coincidence.

The deal will give Diller $1 billion in cash and $100 million in advertising time across the NBC Universal assets over the next three years.

That's right -- advertising time. The deal comes right as NBC is undergoing its toughest advertising upfront market in over 15 years - one where the network has had to rollback primetime pricing anywhere from one to three percent, according to media buying executives.

Why is this important? By including advertising time in Diller's payment, NBC is taking a sizable chunk of prime inventory off the market. All this can act to artificially tighten ad inventory market to keep NBC Universal program prices from falling further.

Nice move.

It hasn't been disclosed whether Diller will use all this advertising time for his Internet companies or whether he'll be allowed to resell the inventory. [Typically, network advertising chiefs frown on third parties selling off their advertising time.]

Adding the advertising piece of the puzzle to this deal may have been incorporated to avoid tax problems for Diller's company. IAC claimed it was owed taxes by Vivendi Universal concerning its 5.4 percent stake in VUE. NBC Universal remains 80 percent owned by General Electric and 20 percent by Vivendi Universal.

Though NBC wound up in fourth place this season, network advertising inventory is still a highly valued commodity. One hundred million dollars in advertising time over the course of three years is a lot of marketing resources - perhaps a little too much - for any Internet company.

So if you're watching USA Network's "Monk" or CNBC's "Power Lunch" or NBC's "Average Joe," and you see one too many commercials for Expedia.com, Home Shopping Network, or Lending Tree, you'll know why.