WILMINGTON, Del.—The vice chairman of IAC/Interactive denied suggestions Wednesday that chief executive Barry Diller’s plans to break up the media conglomerate are driven more by his self-interest than the interests of shareholders.
While acknowledging that Diller wants IAC to be independent of controlling shareholder Liberty Media, IAC vice chairman Victor Kaufman said Diller has the best interests of shareholders in mind.
“If he ends up getting more direct ownership, that would be ancillary to the primary objective of doing what would create the most value for IAC shareholders,” he said under cross-examination by Liberty attorney Tom Bayliss.
Kaufman acknowledged, however, that Diller wants to keep IAC out of the hands of Liberty chief executive Greg Maffei, and that Diller’s spinoff plan would prevent Liberty from assuming full control and perhaps ousting IAC executives.
“Mr. Diller doesn’t want Greg Maffei to have anything to do with IAC after he steps down as CEO does he?” Bayliss asked.
“No, he would not,” said Kaufman, who declined to describe Maffei and Diller as “enemies” but confirmed they do not get along.
Kaufman denied that Diller is frustrated by Liberty chairman John Malone, even though Bayliss presented correspondence in which Diller referred to Malone as being “his usual nightmare,” and recounted a difficult conversation with him.
“This is so typical of him,” Diller wrote.
Diller, who has long controlled Liberty Media’s voting rights in IAC board matters through a proxy granted by Liberty, announced in November that he wants to spin off IAC’s HSN home shopping network, Ticketmaster ticketing service, Interval time-share business and LendingTree mortgage referral units.
Under Diller’s plan, each of the spin-off companies would have a single-tier voting structure, with each share of common stock having equal voting power.
Liberty Media, which owns about 30 percent of IAC equity but 62 percent of the voting power of its outstanding stock because of its high-vote Class B shares, has filed a Chancery Court lawsuit challenging the plan because it would dilute its voting power.
In addition to blocking the single-tier spinoff transactions and repealing Diller’s proxy rights, attorneys for Malone are seeking the removal of seven IAC board members, including Diller and his wife, the designer Dianne Von Furstenberg; Edgar Bronfman Jr. and Steven Rattner.
Diller, who is expected to testify Thursday, arrived Wednesday afternoon at the New Castle County courthouse but declined to comment on the proceedings.
IAC and Liberty officials have engaged in informal talks about Liberty swapping its IAC shares for cash and certain IAC assets but have been unable to reach an agreement. Under cross-examination, Kaufman repeatedly denied that he considered the proposed single-tier voting structure for the spinoff companies as leverage to be used against Liberty in trying to force a deal.
Testifying earlier Wednesday, Maffei noted that if Liberty agrees to swap its shares, Diller has the right to convert some of his IAC common stock to Liberty’s high-voting Class B stock, which would leave him in firmer control of the company.
“I would like to have at least 51 percent,” Diller wrote in an e-mail to one of his financial aides.
