Liberty seeks to remove Diller from IAC board

By Gina Keating and Michele Gershberg

LOS ANGELES/NEW YORK (Reuters) - Liberty Media Corp is seeking the ouster of IAC/InterActiveCorp (IACI.O: Quote, Profile, Research, Stock Buzz) 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: Quote, Profile, Research, Stock Buzz) 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.