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Diller Ridicules Liberty's Bid To Eject Him From IAC Board

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By VINNEE TONG, The Associated Press

Published: January 30, 2008

NEW YORK - IAC chairman Barry Diller shot back Tuesday at Liberty Media Corp. CEO John Malone, saying it is "preposterous" that Malone's attorneys have filed court papers to remove him from the board in an effort to gain control of the company.

"Liberty does not control IAC," IAC said in a statement.

New York-based IAC is an Internet conglomerate Diller has built mainly through acquisitions. It owns such brands as Ask.com, Match .com, Evite, Citysearch, Ticketmaster and Lending Tree.

Although Liberty Media owns about 30 percent of IAC's equity, it controls about 62 percent of the voting power because of a dual-share structure under which it holds all outstanding Class B common stock, which carries 10 votes per share. It owns 23 percent of IAC common stock, which is entitled to one vote per share.

Under an agreement, Diller has controlled Liberty's votes for years. At question in the suit filed Monday is whether Liberty can reclaim those voting rights. It claims Diller gave up the rights when he went against Liberty's will in pushing a plan to split up IAC/InterActiveCorp., which also owns HSN, a St. Petersburg home shopping television and Internet operation that has about 2,500 employees in the Tampa Bay area.

"We think the lawsuit will delay IAC's restructuring plans from early third quarter to at least to the end of 2008 and likely indefinitely," Sanford Bernstein analyst Jeffrey Lindsay told investors Tuesday. "It's too early to tell at this stage if the move to oust Diller will gain traction, but it does seem likely to us that the dispute will intensify and will likely delay or derail the spinoff process."

Lindsay said it is more likely now that IAC would sell the home shopping network, Ticketmaster and LendingTree .com.

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