This comes only 40 days after Ask Jeeves' acquisition of Bloglines. The New York Times report did not even mention Bloglines.com as a factor in the deal.
Staring at the IAC home page for five minutes will convince you that Bloglines.com doesn't belong there (HSN? LendingTree.com? Match.com?)
What are they going to do? Offering you Home Shopping Network gadgets based on what you blog? Offering 4 home loans every hour based on what you blog? Matching you up with the other half based on what you blog?