LOS ANGELES Barry Diller has defeated former friend John Malone in a court battle to determine which of the billionaire media moguls should control IAC/InterActiveCorp.
In a lengthy ruling delivered Friday, Delaware Chancery Court Judge Stephen Lamb said IAC, run by chairman and CEO Diller, did not need permission from Liberty Media and chairman Malone to split IAC into five companies.
Liberty controls IAC with 30 percent of the stock, but with 62 percent of the voting shares, only Diller has had the proxy to vote those shares as he saw fit. Diller’s plan to chop up IAC, though, included abolishing the supervoting stock structure, thus reducing Liberty’s influence on the company and giving it reason to object to the strategy.
IAC sued Liberty in January, and Liberty countersued shortly thereafter.
During a weeklong trial, Malone told how Diller was making vast sums of money running IAC in contrast to shareholders who had been losing money as the stock price fell.
Diller, on the other hand, argued that his plan to split up IAC was for the benefit of shareholders while Liberty’s objections were based on what was good for Liberty and Malone.
The sometimes testy testimony included Diller’s characterization of Liberty CEO Greg Maffei as an “irresponsible executive.”
Liberty also was seeking to oust Diller and his wife, Diane von Furstenberg, from the IAC board and to reverse that all-important proxy that gives Diller the right to vote Liberty’s IAC shares.
In the end, though, Lamb said Liberty hadn’t breached the proxy agreement and that IAC may be split up as Diller likes, providing he gets the backing of the board of directors.
Liberty has contended that Diller’s plan all along was to either wrest control of IAC away from Liberty or to force it into trading its IAC shares for some of IAC’s assets, which include Ticketmaster, HSN, Ask.com, Match.com, Evite, Citysearch, LendingTree and others.
IAC shares, which have been in a funk for the better part of four years, rose as much as 10 percent in after-hours trading Friday, when news of its legal victory broke.
In his ruling, Lamb referred to the “unusual character” of the dispute and Liberty’s “publicly expressed dissatisfaction with IAC’s performance.”
He also ruled that Liberty’s “contract-based objections” to IAC’s spinoff plan “lack merit and should be dismissed.”
The judge also noted that the proxy gives voting power to Diller, not Liberty, so the new structure Diller is proposing actually will reduce his own power.
He also noted that, while Liberty would not have majority voting control of the various IAC companies, it still obtains the “ability to exercise very substantial voting power in each one of them.”