IAC’s Barry Diller and Liberty Media’s John Malone agreed upon a spinoff plan for IAC businesses, but a little something in the fine print turned the plan into a court fight.
Everything comes down to control, especially with media magnates wrestling over billion-dollar deals. Diller picked this particular fight by reaching a lot farther for control of the IAC spinoff companies.
If the plan goes through as proposed, IAC splits into five companies. The side benefit for Diller would be a reduction in Malone’s control in favor of an increase in Diller’s, though a change to a single class of stock for ownership of the businesses.
The Wall Street Journal noted Malone’s objections to this in court, as the case opened in Delaware with Malone on the stand:
Mr. Malone also testified that any restructuring of IAC must proceed in a way that preserved the dual-class voting structure through which Liberty exercises its majority control.
“It’s a breach of the stewardship that we granted him when we started this whole relationship,” said Mr. Malone, who also referred to Mr. Diller’s spinoff proposal as a “crossing of the Rubicon.”
Malone also took shots at Diller’s management style, his compensation, and his use of the company jet.
The change to a single class of stock would make Diller, not Malone, the real winner, as PaidContent noted:
One point to keep in mind: Malone voted with the rest of the IAC board to approve the spinoffs. The real trouble started with the fine print, when it became clear that Diller
