Liberty seeks to remove Diller from IAC board

LOS ANGELES/NEW YORK Tue Jan 29, 2008 6:42am EST

IAC/InterActiveCorp. Chief Executive Barry Diller speaks during the Reuters Global Technology, Media and Telecoms Summit in New York, May 14, 2007. Liberty Media Corp is seeking the ouster of Diller from its board of directors in a quickly escalating dispute over how to restructure the Internet conglomerate, according to legal filings on Monday. REUTERS/Keith Bedford

IAC/InterActiveCorp. Chief Executive Barry Diller speaks during the Reuters Global Technology, Media and Telecoms Summit in New York, May 14, 2007. Liberty Media Corp is seeking the ouster of Diller from its board of directors in a quickly escalating dispute over how to restructure the Internet conglomerate, according to legal filings on Monday.

Credit: Reuters/Keith Bedford

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LOS ANGELES/NEW YORK (Reuters) - Liberty Media Corp is seeking the ouster of IAC/InterActiveCorp (IACI.O) Chairman Barry Diller from its board of directors in a quickly escalating dispute over how to restructure the Internet conglomerate, according to legal filings on Monday.

A legal action filed in Delaware by the majority shareholders in IAC asks a court to uphold their removal of Diller, his wife Diane Von Furstenberg, Edgar Bronfman Jr, Victor Kaufman, Arthur Martinez, Steven Rattner and Alan Spoon from the board.

Liberty LINTA.O and its affiliates also asked the Delaware Chancery Court to bar the deposed board members from going forward with the disputed spin-off plan or any other non-routine business transactions while the court deliberates on the matter.

Liberty has accused those IAC board members of breaching their fiduciary duty with a plan to dilute Liberty's voting control over IAC's businesses in a proposed spin-off of four of its largest units.

The shareholder plaintiffs said they informed Diller and the IAC board of their requested removal on Monday.

"It seems Liberty has gotten truly desperate," IAC General Counsel Greg Blatt said in a statement. "The only action IAC has taken is to proactively go to the Delaware courts to ask it to confirm IAC's rights, and how that could be a breach of anything is beyond comprehension."

Liberty seeks to name three of its own nominees to the board: Liberty CEO Gregory Maffei, Mark Carleton and William Fitzgerald.

Tensions between Diller, the media veteran who is also IAC's chief executive, and Liberty Chairman John Malone went public last week over a plan to spin off the HSN shopping network, Ticketmaster box office service, Interval time-share exchange and LendingTree mortgage service from IAC.

Liberty initially approved the plan in November after expressing mounting frustration over IAC's share performance. But Malone raised objections earlier this month when Diller proposed a single-tier share structure for the spun-off units that would dilute Liberty's control.

Diller last week asked the Delaware court to uphold his long-held right to vote Liberty shares in favor of the single-tier share system, despite Malone's opposition.

Liberty fought back in a countersuit that accused Diller and his close associates on IAC's board of staging a "corporate coup" to wrest control away from Liberty. Liberty owns nearly 30 percent of IAC, but has almost 62 percent voting control

IAC sought to complete the spin-offs in the second or third quarter, but Diller had not ruled out selling some of the units to another party beforehand.

Liberty officials were not immediately available for comment.

(Editing by Richard Chang, Gary Hill)

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