Delaware Decision Delivers Diller

Judge Dismisses Liberty’s Attempt To Stop IAC Boss From Splitting Company

By Mike Farrell -- Multichannel News, 3/28/2008 3:23:00 PM

A Delaware Chancery Court Judge ruled in favor of IAC/InterActiveCorp late March 28, dismissing Liberty Media’s attempt to block the Internet giant’s attempt to split into five separate companies.

The ruling came two weeks after a five-day trial in Wilmington, Del., where both sides hurled barbs about each party’s financial and business acumen, would seem to be a major blow to Liberty, which had hoped that the trial would allow it to sever its relationship with IAC chairman Barry Diller once and for all and gain control of IAC.

The dispute stemmed from IAC’s Nov. 5 plan to split into five separate entitities – IAC, Ticketmaster, HSN, Lending Tree and Interval International. Liberty, which initially was in favor of the split, changed its mind when it learned that Diller had planned a single-tier structure for the spins. Liberty, which owns a 29% economic interest but 62% voting control of IAC, claimed that the single tier structure would halve its control of the entities. Liberty, through an earlier arrangement, granted Diller an irrevocable proxy to vote their shares.

Diller had claimed that because of that proxy, he was allowed to change the structure as he pleased. Liberty countered that the split as proposed violated their proxy agreement with Diller and would effectively transfer control of IAC to Liberty.

In the end, Delaware Chancery Court Judge Stephen Lamb sided with Diller. In his 78 page decision issued late on March 28, Lamb wrote that the single-tier spin will not violate the agreement.

“For all the foregoing reasons, judgment will be entered … in favor of the defendants [IAC] and against the plaintiffs [Liberty] and that action is dismissed with prejudice,” Lamb wrote. He added that IAC does not need Liberty’s consent to complete the spin-off.

Liberty Media declined to comment on the ruling. 

For Diller, it's simply time to move on. 

“I wish this hadn’t happened, but it did,” he said. “Now it’s over and we can all get on with our work and lives.”