Barry Diller emerged on top Friday in his open court duke-out with John Malone, clearing the way for Diller to break up his $5.4-billion InterActiveCorp e-commerce empire this summer.
That includes judicial approval to spin off St. Petersburg-based HSN as its own stock, this time without either Diller or Malone's Liberty Media Corp. in control of the TV shopping giant.
Delaware Chancery Judge Stephen Lamb ruled that Diller had not violated his contract with Liberty and was free to ask the IAC board and shareholders to approve the spin-offs into five independent companies. Diller would keep his interest only in what's left of IAC and Ticketmaster.
Whether the complex deal comes off as originally planned remains to be seen, given the endless dealmaking histories of principal players Diller, 66, and Malone, 67. While the billionaires have been close partners for two decades, the gloves came off last fall when Malone asked for a corporate divorce and Diller responded with a spin-off plan two months later that seriously undermined the value of Malone and Liberty's interest.
Lamb, however, said Diller's deal with Malone was not breached, partly because the IAC board has yet to vote on it. So the warring pair could be back in court.
The dispute dates from 1995, when Malone lured Diller to take over then-struggling HSN by letting him vote Liberty's 62 percent controlling interest in the company as long as he wanted. Diller used HSN as the foundation to build IAC, which grew into a conglomerate of 60 businesses that now includes Ticketmaster, LendingTree and Ask.com.
Today, Liberty holds 62 percent of the voting shares, but owns only 30 percent of IAC. But Diller still has Malone's proxy to vote the controlling shares as he pleases, the judge ruled.
In each of the spun-off companies, Liberty would no longer have 62 percent of the voting power, only 30 percent.
Liberty owns QVC, the world's biggest TV shopping network, outright. As part of the divorce settlement, Malone was interested in getting back HSN, QVC's biggest TV shopping rival. But months of talks collapsed over price and Malone's insistence on a tax-free stock swap.
IAC and Liberty both sued. Diller wanted a judge's blessing that he could eliminate the dual-class voting structure in the breakup. Malone wanted the judge to stop Diller from voting Malone's shares to erase Malone's controlling interest. He also wanted affirmation he could fire Diller and six loyal IAC board members, including Diller's wife, Diane Von Furstenberg.
Diller said he turned on Malone to protect other IAC shareholders' interest in the spin-offs and to keep "these little baby" companies from being squashed in the internal politics of much larger Liberty. Diller was all business after the verdict: "Now it's over and we can all get on with our work and lives."