Diller, Malone Resolve Dispute Over IAC Breakup

Media moguls Barry Diller and John Malone have settled their spat over the split-up of Diller's company, IAC, and Diller got largely what he wanted.

Yesterday, Malone -- IAC's largest shareholder -- said he would drop his appeal of a Delaware court's March decision that allowed Diller to go ahead with the breakup of his company. IAC/InterActiveCorp is a complicated holding company made up of more than 60 brands; Diller wants to split it into five publicly traded companies.

In return, Malone gained additional representation on the board of each new company. Malone, however, also agreed to a "standstill" arrangement that limits his ability to increase his stake in the new companies.

Diller has maintained that IAC is too complicated for Wall Street to value correctly, depressing the company's stock price.

In the split, IAC would retain most of the company's Internet assets, such as Ask.com and Match.com.

IAC's Home Shopping Network would be spun off into its own company, called HSN Inc.

Ticketmaster would be spun off and keep its name.

The fourth new company would bundle IAC's online travel businesses and be called Interval Leisure Group, or ILG Inc.

And IAC's housing-related products, including LendingTree.com, would become Tree.com Inc. in the spinoff.

All would trade on the Nasdaq Stock Market.

Malone, chairman of Liberty Media, sued to stop the split-up in January. Malone holds preferred shares in IAC but would hold only single-vote shares in the separated companies, diluting his control of the new firms. Malone is IAC's largest shareholder, with 23 percent of outstanding stock. Through his preferred shares, he controls 62 percent of the company, though he granted Diller the right to vote his shares when the company started up.

In March, the Delaware Chancery Court sided with Diller, dismissing Malone's suit.

Yesterday, as IAC filed its spinoff documents with the Securities and Exchange Commission, Diller and Malone made public peace.

"Now it's really over and that's great for both of us," Diller said in a joint statement with Malone.

"I am pleased that we were able to amicably resolve our dispute with IAC," Malone said in the statement. "Liberty supports the proposed restructuring of IAC and looks forward to the ongoing success of each of the new entities and IAC."

IAC and Diller announced the settlement after the market closed yesterday. IAC stock closed up 62 cents, at $23 per share, and rose further in after-hours trading.

Diller is a director of The Washington Post Co.