Barry Diller, the IAC overlord who has spent years attempting to sell the world on the idea of an internet conglomerate, now admits that conglomeration was a bad idea from the start.

In a long profile by Duff McDonald (who is possibly the best business profile writer working today) in the new issue of Portfolio, Diller says: “We were kidding ourselves if we thought we could pull off an integrated conglomerate that acts like G.E. or P&G in anything less than 10, 20, or 30 years.” His plans now include “blowing up IAC and leaving the company’s disparate parts to operate on their own,” according to the Duffster.

Although the tech-oriented Web 2.0 kids are likely to herald this as a triumph for independent, niche, small-is-wonderful tech companies with important lessons for deals such as Electronic Art’s proposed acquisition of Take-Two software, we can’t help but be struck by how much of the failure of IAC is part of the much larger mortgage story. IAC bought online mortgage middleman Lending Tree, familiar to many of our readers from its once ubiquitous ads on CNBC, for $726 million in 2003. Last year, IAC wrote down the value of LendingTree by $475.7 million. With the mortgage market still face-down and floating in the seas of plummeting real estate prices and tight credit, there’s likely to be even further write downs. For a company with under $13 billion in total assets, that’s an enormous amount to lose on single asset.

Of course, we can’t help but wonder if the proposal to slip of IAC and Diller’s newfound love affair with “anti-conglomeration” isn’t a contrary indicator. If Diller is short, is that a signal to go long conglomeration? That’s one way to read the position of Liberty Media, the Malone family controlled corporation which owns 62 percent of the voting power in IAC and is locked in litigation with Diller to prevent the break-up of the company. Of course, Liberty Media’s stock performance pretty much tracks IAC’s—both have consistently underperformed almost any broad stock index you can name—so we’re not sure we’d want to follow their lead on anything.

The Confessions of Barry Diller [Portfolio]

Barry Diller told the Financial Times yesterday that executive compensation is “no big deal” and that he thinks corporate governance reforms are undermining the competitiveness of US business. “We [Americans] have found ways to take our competitive edge actually mechanically away from us,” Mr. Diller (in all likelihood) snarled. “You have boards now that are skittish in every area. They’ve made chief executives very skittish.” (“You know who else is skittish? Skittish people. That’s who else is skittish.”)

Diller also noted that exec compensation is “a very tiny slice of companies’ overall expenses” (which really quite true: the management at Scores hasn’t does business via barter in years) and blamed those good for nothing journalists for making mountains out of molehills. (This may or may not be true, though the assertion that what reporters are doing is “close to criminal” seems a smidge mellow-dramatic, even for the guy who is rumored to have brought down the house during his high school drama club’s production of West Side Story.)

The D-man also took the time to defend a few of his friends’ paychecks. He told FT that Bob Nardelli had been robbed and, for his big finish—we can only assume—brought in the big guns:

Take Enron—that’s a classic example of people sticking their noses where they don’t belong. I actually considered a letter-writing campaign on behalf of Lay and The Koz, my brethren, but figured they were going to get off, considering what I thought was a baseless case being waged by a couple of overeager prosecutors. I still call mistrial. I do. I do.

Diller calls executive pay ‘no big deal’ [FT]

We sort of suspected that Barry Diller might agree with us that a lot of the sound and fury raised against executive compensation gets things exactly backwards—many of executives of public companies probably aren’t paid enough. And the fact that the Corporate Library awards IAC/InterActiveCorp a grade of ‘D’ on corporate governance was probably a good sign that the fetish for procedural governance isn’t high on the list of things that turn Barry on. But it was nonetheless a pleasant surprise to see Barry this morning throwing a couple of jabs at the corporate governance types, the New York Times and Gretchen Morgenson.

The chairman and controlling shareholder of the Internet media conglomerate singled out governance research groups as well as the business page of The New York Times, which he said had a “loony” view of executive pay.

He also said he had no use for the cottage industry of compensation consultants who advise boards of directors…

Diller said he found “the whole issue of executive compensation and particularly the policy of The New York Times business section toward executive compensation … absolutely loony.” He singled out, in particular, business writer Gretchen Morgenson, who often writes about executive pay and corporate governance.

Larry Ribstein call your office. Barry Diller’s a fan! (Or should be, since Larry is one of the best critics around of Morgenson.)

Diller derides investor watchdog groups [Reuters]

Barry Diller took home $469 million last year and Times op-ed columnist Nicholas D. Kristof, for one, is not happy about it. Which is why he’s awarding Mr. Diller with an ‘Eisner,’ an idea we’re pretty sure he stole from the people that brought you the Razzies.

Just think! If you’re capable of running a company only a little worse than the average C.E.O., then Mr. Diller thinks you’re worth almost half a billion dollars!

So I’m delighted to announce that Mr. Diller is this year’s winner of my Michael Eisner Award, given annually to commemorate the former Disney chairman’s pathbreaking achievements in corporate rapacity. The winner of the Eisner award receives a shower curtain — this year it’s a lovely pink floral model costing $5 — in honor of the $6,000 one that Tyco’s shareholders purchased for their former C.E.O.

America’s Laziest Man? [NYTimes]

When the word spread last week that IAC/Interactive Barry Diller is the highest paid chief executive in America—by some counts pulling down $295 million last year—it should have been clear that he expected IAC/Interactive to come up with some dynamite numbers this quarter. It’s pretty simple really. Diller was clearly cooperating with the reporters covering his pay package and there’s no way he would do this if his company wasn’t going to beat expectations this quarter. No one wants to be known as the highest paid executive of an underperforming company. We’ve got a word for that—“Bloodsucker.”

And now we’ve got a word for whatever the opposite of that is. And, like it or not, it’s BarryDiller.

IACI soars on earnings; Google buys a Wiki-maker [MarketWatch]