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Liberty Media Unloading IAC Shares At Rapid Pace

Doug Caverly — Wed, 31 Dec 2008 14:57:52 +0000

Liberty Media – and/or its chairman, John Malone – may not have a lot of faith left in Ask.com and other IAC properties. It seems that Liberty Media has selling the company’s stock left and right, unloading 193,100 shares in the last week alone.

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.

Diller Defends Denying Liberty Media Proposals

WebProNews Staff — Thu, 13 Mar 2008 23:39:47 +0000

When John Malone came calling about possible asset swaps between Liberty Media and IAC, Barry Diller turned them down for not providing good value to IAC investors.

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.

Diller, Malone Open Court Battle Over IAC

WebProNews Staff — Tue, 11 Mar 2008 11:02:43 +0000

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

Diller Facing Ouster From IAC

WebProNews Staff — Tue, 29 Jan 2008 10:54:20 +0000

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.

Liberty Media Takes Control Of Bodybuilding.com

Doug Caverly — Tue, 08 Jan 2008 19:23:00 +0000

There’s no telling how long this deal was in the works, but its announcement certainly seems to have been well-timed; just as "American Gladiators" returned to television, Liberty Media took control of Bodybuilding.com.

Yes, I’ll admit to having watched "American Gladiators" on both Sunday and Monday, and although the show needs to lose about 90 percent of its dialogue (a term I use loosely), it was kind of fun. It was also the sort of thing that’ll probably send dozens of guys to the nearest gym, and hundreds more to the nearest bodybuilding website.

Odds are decent that the site’ll be Bodybuilding.com, which claims to have received 3,100,000 unique visitors in November of 2007. Also, Michael Zeisser, the senior vice president of Liberty Media, stated, "Bodybuilding.com is a fast growing leader in fitness nutrition e-commerce and the authentic voice of the bodybuilding community . . ."

So a large price tag on Bodybuilding.com makes sense, and Jessica E. Vascellaro reports that a controlling stake cost Liberty Media "more than $100 million." No layoffs or reorganizations are planned; this appears to have been a simple reshuffling of ownership papers. I’d recommend some tie-ins with "American Gladiators," though, if there’s any money left over for advertising.