Warring dealmakers John Malone and Barry Diller had lawyers quietly negotiating how to sever their 13-year partnership even as they traded brickbats this week in front of a Delaware Chancery Court judge.
Little mention of the talks hit the courtroom Thursday, where Malone, 67-year-old chairman of Liberty Media Corp., and 66-year-old Diller wrestled over Diller's plan to split up his IAC/InterActiveCorp by wiping out Malone's majority voting clout.
Chancery Judge Stephen Lamb is expected to rule within two weeks; that is, unless he's upstaged by a back-room breakthrough in what's been labeled the "Clash of the Moguls."
Diller wants the judge to validate his claim that Malone gave up veto power when he handed Diller the right to vote his company's controlling shares. That would cut Malone's voting power from 62 to 30 percent. Malone countered by asking the judge to affirm his power to fire Diller and purge Diller's six handpicked IAC board members. That includes Diller's wife, apparel designer Diane von Furstenberg.
St. Petersburg-based HSN is at the center of the dispute. A stock-swap deal that valued the home shopping network at about $2.4-billion fell apart last year. The deal would have returned full ownership of HSN to Malone and Liberty, who already own rival QVC outright. In return, Liberty would have given up its interest in Diller's IAC.
Diller described trying to strike the deal with Malone as "the usual nightmare."
Malone wooed Diller in 1995 to revive HSN by handing over Liberty's voting shares that controlled the TV shopping channel. Diller then used the company and its cash flow as the foundation to build his e-commerce empire IAC.
Malone and his directors didn't object to rewarding Diller $1.1-billion despite the company's market value slumping over the past five years to $6-billion, down from $22-billion. But trying to unilaterally cancel Malone's voting power proved too much.
Diller said putting Liberty in control of the IAC spinoffs endangered their future at a cost to other shareholders. QVC executives, for instance, already said they saw little efficiency combining QVC and HSN.
The animus between Diller and Greg Maffei, Liberty's chief executive, also appears to be deeper than philosophical. Diller personally knifed $28-million worth of stock options Maffei held in a previous job when IAC acquired Expedia Inc. in 2002.
Describing Maffei as an "irresponsible executive," Diller testified that the Liberty CEO last year launched a "campaign" to smear him.
Mark Albright can be reached at email@example.com or