Liberty Media chairman John Malone blasted IAC/InterActiveCorp chairman Barry Diller during the first day of their much anticipated trial in Delaware, saying the conglomeration of Internet and media properties has plummeted in value under Diller’s leadership, while the media mogul has reaped huge cash benefits.
Bloomberg News reported Malone said that IAC’s fortunes have dwindled under Diller’s leadership.
“You can play all kinds of games with the numbers, but since 2000, they have lagged seriously behind the Nasdaq and other indexes,” Malone said according to Bloomberg.
Diller and Malone are ironing out their differences in Delaware Court of Chancery, where IAC filed suit on Jan. 22 for court approval of its planned split into five separate companies.
Liberty countersued on Jan. 24, claiming that the split would dilute its holdings in IAC.
Liberty owns a 29.9% economic interest in IAC but 61.7% of its vote. It allows Diller to vote those shares as part of its original agreement.
But the two moguls, considered friends during their decades-long relationship, hit a rough patch earlier this year concerning the IAC split. Because Diller wants the new entities to have a single-tier voting structure – as opposed to its current two-tier make-up – Liberty’s voting stake could be more than halved from to 29%.
According to Bloomberg, Malone said that Liberty has been concerned about Diller’s management style for years, pointing to what he called “unusually high” management turnover at companies Diller purchased.
Malone also said that a $275 million fee Diller received as a consultant in French conglomerate Vivendi’s sale of its media assets in 2004 to NBC “raised eyebrows,” according to Bloomberg.
Diller had sold his USA Networks assets to Vivendi in 2001 and as part of that deal retained a personal 1.5% ownership stake in the newly created Vivendi Universal. Vivendi bought out Diller’s stake when it sold the media assets to NBC.
That fee was in addition to $1.1 billion in compensation Diller received from IAC, Malone said.
Malone added that Diller’s use of IAC’s corporate aircraft also “pushed the boundaries,” Bloomberg reported.
This was the first day of what is expected to be a five-day trial before Delaware Chancery Court Judge Stephen Lamb.
Diller and Liberty CEO Greg Maffei are expected to take the stand later this week.
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