Feathers fly in IAC-Liberty Media cockfight

In what may shape up to be one of New York media's most colorful feuds of 2008, IAC/InterActiveCorp Chief Executive Barry Diller and one of its most high-profile stockholders, Liberty Media head John Malone, are at each other's throats Mean Girls-style. And they've brought both their legal and PR teams along for backup.

A vicious press release from IAC on Tuesday morning said that Liberty "has gone off the deep end" in its attempt to control the company's board and oust Diller from his role, and that Malone's cable giant "will stop at nothing to advance their own interests at the expense of the other stockholders."

On Monday, Malone had served Diller with the latest in a series of lawsuits in a Delaware court, seeking to oust a total of seven people from IAC's board--including Diller himself--in the wake of the sprawling company's decision to split into five separate publicly traded entities. The cluttered nature of IAC was hurting shareholder confidence, Diller had argued when he made the original announcement in November. The company plans to keep ad-supported media brands like Evite, CollegeHumor, Excite, and Citysearch under IAC's scope while spinning off commerce brands like Ticketmaster and retail brands like HSN.

The spinoffs, Malone argues, will be a massive blow to Liberty Media. The cable conglomerate owns about a third of IAC's equity, but due to its ownership of all IAC Class B common stock, it has significantly broader voting power within the company. The five-way IAC split would knock that down significantly.

Diller said in a statement to The Wall Street Journal earlier this week, "I am beginning to think these people are insane."

IAC's blunt press release on Tuesday echoed that. "The contention that Liberty is now in control of the Company is inexplicable. Nothing has happened yet," the statement read. "No Board has decided anything. No shareholders have voted (or been asked to vote) on anything. No agreements have been signed. The requisite filings have not been made with the SEC. No transactions have been consummated. Even after reading the various complaints repeatedly, Liberty's theory that it now controls IAC is incomprehensible."

The statement from IAC described Liberty Media's actions in the whole legal feud, which has no end in sight, as "a desperate sideshow."

Meow.