The battle of the business titans escalated Monday as Liberty Media chief John Malone called for the ouster of IAC/InterActive Corp. chief Barry Diller, who’d like to break up IAC and ease Malone out of the picture.
Malone filed a court action to remove Diller and six other directors — including Diller’s wife, designer Diane von Furstenberg, Edgar Bronfman Jr. and media banker Steven Rattner — from IAC’s board. Malone wants to replace them with new faces, one being Liberty CEO Gregory Maffei.
The papers were filed in Delaware Chancery Court, where the two moguls have been firing off lawsuits and motions for the better part of a week over the future of IAC. Diller created the company years ago with Malone’s backing, and Liberty remains a sizable shareholder.
The question of Liberty’s influence going forward has been the crux of the current battle. Diller’s plans, announced in November, would split the company into several pieces and in the process dilute Liberty’s stake and its control over the assets. Liberty holds about 30% of the equity and 62% of the voting control of IAC, which is made up of a group of companies including Ticketmaster, Home Shopping Network and a diverse stable of dot-coms.
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A major wrinkle is that Liberty agreed early on to cede voting power of its shares to Diller. Diller intends to vote those shares in favor of a split-up, a position in direct conflict with Liberty’s interests. Liberty insisted in court documents late last week that a breakup would constitute “fundamental change” that overrides the earlier agreement and that would require Liberty’s consent before Diller can exercise his proxy authority.
IAC disagreed. “Under the proxy, Diller is entitled to vote the shares without regard to the directions of Liberty and without subservience to the specific interests of Liberty,” the company said.
Further complicating the relationship has been the tepid performance of IAC shares, and Diller’s hefty — some have said excessive — compensation packages. IAC shares ended Monday at $25.15, up 3.16% from Friday’s close. But the stock is well off its 52-week high of more than $40. Relations between the two moguls would likely have been more amicable if IAC stock had been a stellar performer or its disparate pieces jelled into something more cohesive.
“Liberty’s renewed focus on financial returns and executive compensation at IAC coincided with an equal and opposite priority shift for Diller, who was becoming increasingly concerned about succession issues and his legacy,” Liberty said in the filing Monday.