AC/InterActiveCorp, the Internet company headed by Barry Diller, is close to an agreement to acquire Ask Jeeves Incorporated for about $1.9 billion, according to an executive involved in the negotiations, the New York Times reported on its Web site last night.

IAC/Interactive’s principle holdings are Expedia, Ticket Master, Home Shopping Network, Match.com, and CitySearch. Ask Jeeves is well positioned to benefit from the rapid growth of ad spending on search sites, according to experts, said the Times.

Most of Ask Jeeves’s revenue comes from advertising that appears on its sites through a contract with Google. That contract reportedly runs through 2007.

Fourth-quarter profits and revenue at Ask Jeeves – the nation’s fourth largest search engine company – more than doubled to $17.5 million in net income as revenue rose to $86.1 million from $31.8 million a year earlier.

IAC/Interactive has 44 million visitors a month to its various sites, the Times reported. CitySearch offers Web surfers local information in different cities. By marrying a local business with a national search operation, Interactive hopes to benefit from further growth in targeted key-word advertising, the Times reported. For example, if an Internet users CitySearch to look for Greek restaurants in Chicago, local advertisers could reach him by buying space on results pages.

IAC/Interactive is expected to acquire Ask Jeeves in a stock transaction, and then redeem 60 percent of the purchase price for cash, according to the executive involved in the transaction, the Times reported. That means that about $1.2 billion of the acquisition price would be in cash, according to the Times.

Ask Jeeves closed Friday at $24.24 a share, and IAC closed at $22.29. The bankers in the deal are J.P. Morgan, Allen & Company and Citibank, the Times reported.