- Clash of the titans
This one is about to get very juicy: John Malone's Liberty Media is trying to seize control of Barry Diller's IAC/InterActiveCorp. Liberty, which owns a majority voting stake in IAC, filed a court action late today to remove Diller from IAC's board. Also, Liberty is trying to remove Diller as the sole director of BDTV, a little-known entity through which Liberty owns most of its stake in IAC. Last week, IAC and Liberty sued each other over IAC's attempt to spin off most of its businesses in several new companies. The new structure would limit Liberty's influence. All this has been building for some time, as explained by MediaPost's Diane Mermigas.
Malone waited for Diller's IAC to be well along in its plans to break itself up into five Internet and media-based entities before firing the first salvo in a lawsuit filed Jan. 23. Liberty, which is IAC's controlling shareholder, is charging that Diller's planned restructuring is akin to a "corporate coup" that would dilute Liberty's controlling interest in HSN and Ticketmaster. Liberty's suit seeks to prevent Diller's planned spinoff on the basis that it will limit its voting power. More specifically, Malone objects to Diller's plan to create a single tier of voting shares at the newly spun-off companies, which is different from the two-tier of high and low voting shares currently in place at IAC. Liberty wants to maintain control of the entities that will be spun from IAC as four separate companies.
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Although Malone has helped Diller to build IAC into a $7 billion interactive and media business empire, there are billions more at stake for both men and their portfolio companies, given the explosive growth of online advertising and e-commerce. Key assets held by Liberty Interactive and Liberty Entertainment would benefit from closer relations with or ownership of many of IAC companies. So would DirecTV, which Liberty is in the process of acquiring from News Corp. in a deal sprung from similarly complex equity investment and asset tradeoffs.
Tensions between the two guys have been building for a couple of years, mostly because of IAC's faltering stock performance. From the WSJ:
Uneasiness about the business relationship surfaced publicly late last year in a page-one article in The Wall Street Journal. "It is a little uncomfortable for Barry," Mr. Malone said in an interview at the time. "Right now we are the shadow that walks around behind him."
In his inimitable way, Diller responds this way:
"After reading this new salvo, I am beginning to think these people are insane. Everything they cite is hogwash. First of all, we have never asked the board to take action on any specific proposal high, low or no-vote. What we have done, which we thought was the responsible thing to do given this conflict, is to go to the Delaware court and ask them to tell us what rights IAC has or doesn't have."
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| 04:25 PM Jan 28, 2008 | Email the Daily Dragon | Email this Article | Post Comments |
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