That’s the simple explanation. Here’s the confusing one: Liberty Media shouldn’t really have to sue to stop IAC’s move, because it actually owns a majority voting stake in IAC — 61.7 percent, to be exact. Being the trusting guy he is, however, Malone long ago agreed to assign Diller the right to vote his shares. Being the crafty guy he is, Diller is now attempting to use those very votes to strip Malone of his majority control. It’s really quite awesome when you think of it: Diller wants to use Malone’s votes to take those same votes away. Got it?
There are two reasons they can’t seem to work it out. Reason number one: money. The stock price of IAC, which once sat around $80, now idles at just over $24. Reason number two: money. Liberty’s complaint includes a line about “issues related to performance and executive compensation.” What could they be referring to? Your guess is as good as ours, but we have a sneaking feeling it might be the $295.1 million in compensation Diller took home last year and the average of $85.9 million over the past six years, according to Forbes. That Diller likes to pay himself a king’s ransom is not news to Malone, of course, but we imagine it can get on one’s nerves when the value of one’s investment falls by nearly half during the same year that one’s CEO is giving himself the third-highest paycheck in the land. This whole spat might just be about money, when it comes down to it.
Here’s the funny part: Malone originally applauded Diller’s plans to restructure, until he realized that what Diller wanted to restructure was Malone himself. As we’ve written before, Malone is the man who showed Diller how to stuff all those financial tricks up his sleeve. The courts will now decide whether he taught him a little too well. —Duff McDonald
Related: IAC/Liberty Wage Two-Way Legal Battle [WSJ]