• by Mark Walsh  @markfwal, November 1, 2007

IAC/InterActiveCorp. reported a 40% year-over-year revenue gain in its media and advertising division, encompassing Ask.com, Citysearch and Evite, in third-quarter earnings released Wednesday.

But the company's transactions and retailing units took hits as LendingTree revenues fell 41% to $106 million due to the mortgage crisis and increased operating costs reduced margins for the Home Shopping Network. Operating income at the units fell 23% and 26%, respectively.

For the quarter overall, net income at IAC dropped 4.2% to $71.8 million, or 24 cents a share. Adjusted for certain items, it earned 37 cents a share, beating a consensus analyst estimate of 35 cents a share.

IAC's strong media and advertising growth to $190 million from $135.5 million was driven by an increase in syndicated search queries and in search revenue from its Fun Web Products--online toys such as avatars and smileys designed to help boost search traffic. Margins on syndicated search, however, are lower than direct queries on Ask.com because they're shared with other sites.

Operating income before amortization for the division increased 74% to $27.6 million from $15.9 million in the year-earlier period--benefiting from a reduction of $5.8 million in expenses stemming from the distribution of toolbars, which began last April.

LendingTree's financial woes were attributed to a fall-off in loan activity across the board. "Revenue from all home loan products declined...driven by the overall mortgage market deterioration as well as the decline in real estate values," stated IAC.

Sales at Ticketmaster grew 13% during the quarter to $301.3 million from $265.5 million, mainly as a result of an increase in international ticket sales and 2% higher average revenue per ticket. IAC shares closed Wednesday up 3.77%, to $29.46.