IAC, Diller sue Liberty Media over voting rights

LOS ANGELES, Jan 24 (Reuters) - IAC/InterActiveCorp (IACI.O: Quote, Profile, Research, Stock Buzz) and its chairman and chief executive, Barry Diller, sued the company's controlling shareholder, Liberty Media Corp, in a dispute that threatens the Internet conglomerate's plans to spin off four of its largest operating units.

In the lawsuit filed on Wednesday, IAC and Diller asked a Delaware Chancery Court to rule that the spin-off may go forward as unanimously approved by IAC's board of directors, which includes Liberty Media (LINTA.O: Quote, Profile, Research, Stock Buzz) Chairman John Malone.

Diller has long held the right to vote Liberty Media's IAC shares, and he said in the lawsuit that he intended to vote all of those shares in favor of the board-approved spin off.

But at a Jan. 8 IAC board meeting, Malone said he opposes Diller's plan for changing the voting structure at the new companies created by the spin-off to one tier of voting shares from the high-vote/low-vote structure at IAC, according to the lawsuit.

Malone wants the companies to maintain IAC's two-tier structure with the result that Liberty would receive high-vote stock in the transaction and would control each of the newly formed companies, the lawsuit said.

The suit said that Liberty "has also suggested that ... Diller may not vote (Liberty's IAC) shares" in favor of the board-approved spin-off.

Malone also indicated at IAC board meetings on Jan. 8 and on Jan. 16 that Liberty would challenge the proposed transaction in court, the lawsuit said.

IAC plans to spin off HSN, its Ticketmaster box office service, the Interval vacation and time-share business and LendingTree online mortgage service.

The transactions were expected to close in the second or third quarter of 2008. (Reporting by Gina Keating and Michele Gershberg, editing by Richard Chang)