Barry Diller’s decision to spin New York-based IAC/Interactive Corp. into five separate entities last week has the potential to create new opportunities and add shareholder value for Liberty Media Corp.
The Douglas County-based company applauded Diller’s move last week. Liberty owns about 24 percent of IAC common stock, representing an approximate 55 percent “super-voting” interest. However, Diller, the IAC chairman and CEO, has the authority to vote Liberty’s shares, based on a long-standing agreement.
“I think it goes a long way toward resolving what’s been a longtime mild disagreement between Mr. Diller and myself about the appropriate use of leverage in each of these businesses,” said Liberty chairman John Malone in a conference call with analysts Friday.
“I think it’s terrific for us. Each one of these businesses will now have clear independent management,” Malone said. “I think it represents a great opportunity for Liberty and IAC shareholders to focus their investment and their interests in the areas that they (align with) the most.”
IAC, which owns well-known businesses such as Ticketmaster, the Home Shopping Network and Expedia, has seen its shares drop 14 percent this year.
The five spinout companies will be HSN, Ticketmaster, the Interval International vacation timeshare service, LendingTree mortgages and IAC, which will include search engine.
The split was designed to increase shareholder value, in a tax-free transaction. Liberty executives said that although Liberty talked with IAC, it did not instigate the split.
“We played our hand and had our dialogue with Barry about potential transactions prior to the spin and haven’t reached (a) provision,” Liberty president and chief executive Greg Maffei said. “There will have to be many board deliberations at IAC before the actual spinoff can be implemented.”
Liberty said it is unclear how the company’s stake in IAC would apply to Diller’s five spinout companies, although Liberty still has a strong influence over what the ultimate IAC spinoff structure looks like.
Before the split, Liberty was looking to unload its stake in IAC, as part of its overall strategic plan of converting its passive investments into active operating entities. One possibility: acquiring HSN, which is a rival to Liberty’s QVC network.
However, Liberty executives downplayed the possibility of such a deal Friday, despite sluggish growth at QVC, particularly in the United States, where retail sales have been soft.
Malone reiterated past comments about HSN, saying that “at the right value, we certainly think there is some benefit to ownership of the two companies.” Yet he said the two home shopping networks are so different in style and operations that there would be little cost benefit to merge now.
“It seems to me that Liberty is being careful about the synergies of the HSN, because they don’t want to look too eager because then the price goes up,” said April Horace, equity research analyst for Janco Partners in Denver.
“Liberty could wait for them to spin out HSN and see what the true trading (value) would be.”
Kimberly S. Johnson: 303-954-1088 or kjohnson@denverpost.com
