A tussle over the planned breakup of IAC, the parent of Ticketmaster, Match.com, and About.com, has escalated into a bare-knuckles legal and public relations brawl between two media moguls.
IAC, run by Chief Executive Barry Diller, Tuesday labeled an effort to oust to him and seize control of the board by John Malone's Liberty Media "a desperate sideshow" that is doomed to fail. The press release also said that Liberty "has now gone off the deep end."
A Liberty Media spokesman declined to comment.
Jeffrey Shelton, an analyst at Natixis Bleichroeder, based in New York City, likened the tug-of-war to "two kids fighting in the sandbox."
IAC and Mr. Malone's Liberty Media, a holding company that owns a 30 percent share of IAC's economic value but controls 62 percent of its shareholder voting power, filed dueling lawsuits last week in Delaware.
IAC's suit asked a Delaware Chancery Court to rule that the company's break-up into five pieces could proceed. Mr. Diller's plan calls for a core IAC, including Ask.com, to remain after the spin-off of the Ticketmaster, HSN home shopping network, LendingTree mortgage, and Interval International vacation timeshare units.
The crux of the dispute is Mr. Diller's proposal to the IAC board that the five companies convert to a single-tier stock structure after the breakup. That move would halve Liberty Media's voting control to its 30 percent economic interest. Liberty's voting clout derives from its ownership of the Class B stock, with 10 votes per share, and preferred stock with two votes per share. Liberty's 22.8 percent share of the Class A stock carries one vote per share.
Complicating matters, however, is an irrevocable proxy that authorized Mr. Diller to control the voting power of the Liberty shares.
A countersuit filed by Liberty on Tuesday charged that Mr. Diller had committed "misconduct" by disregarding the wishes of Liberty through his announced plan to vote its proxy shares in favor of the spinoff.
The lawsuit also said Mr. Diller was in violation of its stockholder agreement, which allows Liberty to cancel the proxy arrangement and frees it to choose new leadership for the company.
In the lawsuit, Liberty said it was removing Mr. Diller and fellow board members Edgar Bronfman Jr., Victor Kaufman, Arthur Martinez, Steven Rattner, Alan Spoon, and Diane Von Furstenberg, who is married to Mr. Diller.
In place of Mr. Diller, Liberty said it was installing Gregory Maffei, a former executive at Microsoft and Oracle.
"It's going to come down to the interpretation of the stock agreements that IAC and Liberty have together," Mr. Shelton said. "I'd expect there would be some sort of negotiated endpoint."
Liberty, based in Englewood, Colorado, is a holding company with interests in IAC, shopping channel QVC, Expediam, Starz Entertainment, News Corp., and Time Warner.