Barry Diller, chief executive of IAC/InterActiveCorp. (IACI), said Tuesday that his company is open to a "consolidating transaction" in Internet search while noting that the digital media conglomerate would be unlikely to be the "consolidator."

The comments, which came during a conference call with analysts following the company's third-quarter earnings release, signaled a willingness to sell struggling search businesses, such as Ask.com, to larger players, such as Google Inc. (GOOG) or Microsoft Corp. (MSFT).

Many observers have viewed Microsoft's partnership with Yahoo Inc. (YHOO) on Internet search as a blow to Ask.com, which holds a sliver of market share in the business compared to its larger rivals.

Diller said the competitive environment in search is "fierce" and he said the future of Ask.com is "speculative."

He pointed to the company's new media production businesses, such as The Daily Beast and its partnership with Ben Silverman, former co-chairman of NBC Entertainment, as a place where IAC is willing to invest part of its $1.8 billion cash pile.

"Our commitment to this area is real and we’re going to invest," said Diller, estimating the company could deploy 10% of its cash reserves in the area over the next several years.

"If you're going to build a business, you have to invest to get there," said Diller, addressing concerns among investors that IAC will deplete its cash on investments that yield sub-par returns.

Diller noted that IAC's share repurchasing slowed during the quarter as the company discussed a "large transaction" with Liberty Media Corp. (LINTA, LCAPA, LMDIA), the media empire controlled by John Malone. Diller said the company "spent several months sorting through" the deal, but the talks ended unsuccessfully for "technical reasons," even though both sides wanted to proceed.

Diller said he wouldn't rule out a resumption of deal talks with Liberty in the future, but the negotiations are now over, in his view. He declined to comment further on the subject.

"For the future, there’s no change in our view about buybacks," said Diller. "You’ve seen what we’ve done in the past, and we’ll be like-minded in the future."

-By Nat Worden, Dow Jones Newswires; 212-416-2472; nat.worden@dowjones.com