Here's the simple verison of what happened: In November Diller announced his plan to split up the company into five pieces to unlock value--Home Shopping Network, TicketMaster, Lending Tree, its time-share businesses, and a group of a Internet companies, including Citysearch, eVite, Match.com. Here's the catch: Diller's plan, filed Wednesday, would reduce Liberty's voting power in the new companies from 62 percent to 30 percent.
The next day, Liberty sued, accuing Diller of staging a corporate coup, demanding that Diller leave the board of his own company. And while a longstanding agreement gives Diller proxy voting power for Liberty's majority voting stake, Malone want to take that voting power back. Diller responded last night, saying "I'm beginning to think these people are insane." This morning an IAC statement calls Liberty's actions "preposterous," saying "Liberty has now gone off the deep end."
Name calling aside, what does this all mean for IACI stock? Well, interestingly enough, after its year-long slide, today the stock got a bit of a boost, ending up slightly. I interviewed CItigroup analyst Mark Mahaney and he said that he sees this as reflecting some investors' relief at the potential for change at the company. Mahaney also said that he thinks that this conflict between IAC leadership and its controlling shareholder will likely be an overhang on the stock, and it's going to delay the split up of the company, assuming that still happens.
How will Malone and Diller resolve this? That issue lies partly in the hands of the Delaware courts. But it's possible the two sides will strike some sort of compromise, say giving Malone and Liberty more than the proposed 30 percent voting stake in the new companies. Or my colleague Dennis Kneale suggested that this will really put Home Shopping network in play as a potential acquisition/bargaining chip.