After weeks of trading jabs in the press and in legal filings, Liberty Media Corp. Chairman John Malone delivered a potential knockout punch late last night when he sought to remove InterActiveCorp CEO Barry Diller from his own company’s board.
Malone, whose Liberty Media controls IAC through its majority voting stake, asked a Delaware court to remove Diller and seven other IAC directors – including Diller’s wife Dianne Von Furstenberg, Warner Music CEO Edgar Bronfman Jr. and prominent investment banker Steven Rattner – from the company’s board and replace them with his own candidates.
Malone’s request is the latest salvo in a string of skirmishes between the billionaires over control of IAC, whose assets include Ticketmaster, LendingTree, home-shopping channel HSN and Match.com.
“It has become ridiculously contentious between the two of them,” said one source close to both men. “They are genuinely at war.”
The battle began innocently enough when Malone expressed disenchantment with IAC’s stock price performance and not so subtly suggested that a change was needed. Diller responded in November with a plan to break up IAC into five parts, each holding a different unit of IAC’s unwieldy collection of Internet assets that he amassed during a multi-billion-dollar acquisition spree.
At the time, both men were optimistic that the break-up plan would resolve the conflict – that is until Diller filed a petition asking the court to abolish IAC’s dual-class voting structure upon a break-up, which would reduce Liberty’s control of the company.
Malone, who Al Gore famously dubbed “Darth Vader” because of his ruthless negotiating tactics, responded last week by filing a countersuit seeking to annul the agreement that gives Diller the right to vote Liberty’s stake in IAC, arguing that the shareholder agreement had been breached.
Reports then surfaced over the weekend that Diller was trying to enlist outside investors or even potential buyers for any or all of IAC’s five businesses.
That prompted last night’s response from Malone, who sources said has an interest in keeping and/or operating some of IAC’s businesses himself. Liberty has, in the last few years, been moving toward becoming more of an operating media company rather than simply holding large stakes in multiple media companies.
“Upon reading this latest complaint, it seems Liberty has gotten truly desperate,” said IAC General Counsel Greg Blatt in a statement. “The only action IAC has taken is to proactively go to the Delaware courts to ask it to confirm IAC’s rights, and how that could be a breach of anything is beyond comprehension.”
IAC closed up 77 cents at $25.17 yesterday before the news broke. Liberty ended at $107.86, up $1.60.