John Malone

Again, the simplest explanation for these moves may be best.  At $15.77 per share, IAC’s stock is currently much closer to its 52-week low ($13.27) than its 52-week high ($26.99).  The period following December 22nd has been especially tough, with it sinking 3.55 percent since then.  And when was the last time you heard great news involving Ask?

But there are other possibilities.  Julia Angwin, who puts the value of Liberty Media’s recent IAC stock sales at $17.5 million, writes, "Mr. Malone, well known for his complex deals to avoid taxes, could use the paper losses from the IAC sales to offset taxes on other gains. . . .  Recently, Liberty Media has written down the value of its IAC stock by $440 million in the third quarter, citing the ‘lack of near-term prospects for recovery’ in its IAC investment."

There’s also a bit of personal history to consider.  Malone and Barry Diller, the chairman and CEO of IAC, had a serious disagreement over whether splitting IAC was the right move.

Regardless, though, it looks like the odds of Ask remaining any sort of player in the search engine game have become a little slimmer.

The IAC breakup into five companies became a plan after about a year of fruitless discussions between Diller and Malone. Both moguls tried to find a swap of assets between the two firms that would give Diller Liberty’s stake in IAC.

None of those deals came to fruition as the New York Times noted. Diller believe Malone’s proposals did not offer IAC’s stakeholders a fair shake:

“We never accepted one of them,” Mr. Diller said, “because we never got to the value that was appropriate for IAC shareholders.”

In the wake of Malone accusing Diller of threatening to use his proxy voting power to force the breakup plan through, Liberty Media’s leader painted Diller as an overcompensated executive who was more in tune with maximizing time on the corporate jet than leading IAC to profitability.

There may be a light at the end of this litigation-filled tunnel, and not necessarily one at the front of an oncoming train. Barron’s said the two sides have been engaged in settlement talks while their top executives spend quality time in Delaware’s Court of Chancery sparring over control of IAC.

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

]]> http://www.webpronews.com/diller-malone-open-court-battle-over-iac-2008-03/feed 1 http://www.webpronews.com/diller-facing-ouster-from-iac-2008-01 http://www.webpronews.com/diller-facing-ouster-from-iac-2008-01#comments Tue, 29 Jan 2008 10:54:20 +0000 WebProNews Staff http://www.webpronews.com/?p=43742 Ask.com parent company IAC faces a shakeup in the boardroom if Liberty Media’s John Malone succeeds in shoving Barry Diller out of the IAC chairman position.

Unhappiness between gentlemen no longer entails an appointment at sunrise near the tennis court, with rapiers and seconds the order of the day. Sharp and pointed attacks are limited to comments and legal briefs.

Witness the dispute between Diller and one-time (presumably) close acquaintance Malone. Rich, powerful men squabbling over the fortunes of IAC. Of the current dispute, the Wall Street Journal quoted this gem from Diller about Malone and Liberty Media: “I am beginning to think these people are insane.”

The two sides sued each other recently, as a continuation of the dispute over IAC’s plan to split into five publicly traded companies. It’s a matter of control: Diller’s plans for the breakup leave Liberty with little influence in the four companies aside from IAC – HSN, TicketMaster, Interval International, and LendingTree.

A decision in the current exchange of lawsuits could break Diller’s stranglehold on IAC. Delaware’s Court of Chancery will decide the issue, a powerful proxy setup that lets Diller vote Liberty’s majority shares on IAC issues.

Jim Lanzone must be glad to be away from Ask and IAC these days.

]]> http://www.webpronews.com/diller-facing-ouster-from-iac-2008-01/feed 0