The New York Times-20080129-Liberty Asks For Power To Push Out Diller at IAC

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Liberty Asks For Power To Push Out Diller at IAC

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Ratcheting up a dispute between two media giants, the Liberty Media Corporation asked a Delaware Court of Chancery on Monday for the right to take control of IAC/InterActiveCorp and oust its chief executive, Barry Diller.

A battle between Mr. Diller and John C. Malone, chief executive of Liberty Media, has grown increasingly acrimonious, in large part because of Mr. Diller's attempt to increase IAC's value by splitting it into five operations.

In the process, Liberty would have lost control of IAC. In separating the operations, Mr. Diller had sought to cancel the super B shares through which Mr. Malone controlled IAC. Mr. Malone saw this as an effort to end Liberty's sway over IAC.

Through a long-standing arrangement between the two companies, Mr. Diller has the right to vote Liberty's supershares in IAC.

Liberty initially filed suit last week in Delaware, seeking to block Mr. Diller's plans. IAC countersued, arguing for the right to proceed. Liberty responded Monday with yet another suit accusing Mr. Diller of breaching his fiduciary responsibility.

These people are insane, Mr. Diller said in a phone interview Monday night. IAC has taken no action except to seek a ruling whether it has a right to split up the company.

A spokesman for Mr. Malone said he would not be available for comment.

Under Mr. Diller's plan, IAC, which he would continue to run, would include the company's core Internet businesses: the search engine Ask.com, the dating site Match.com and Citysearch. HSN, the home shopping network that has continued to lag behind QVC, a company owned by Liberty Media, would be spun off, as would LendingTree.com, the online lending business that has been badly hit by the housing downturn.

The other two spinoffs would be Ticketmaster and Interval, an online business that sells vacation time shares.

Liberty's suit also seeks the removal of seven IAC board members, including Mr. Diller; his wife, the designer Diane von Furstenberg; Edgar Bronfman Jr.; and Steven Rattner.