By buying out John Malone’s Liberty stake in IAC, Chairman Barry Diller effectively turned IAC into a billion-dollar family business on Thursday.
In an exclusive interview with TheWrap, Diller said that as a result of buying Liberty Media’s shares, his personal and family holdings rise to 40 percent of the company.
“We have decided that this is a long-term generational ownership of this company,” he said in an interview, noting that this was also a long-term strategic move.
Liberty, run by Malone and based in Englewood, Colorado, sold back its interest in IAC (12.8 million shares, or about 60 percent of IAC's voting stock) for $220 million in cash. As part of the arrangement, Liberty also will get two IAC properties: Evite and Gifts.com.
Diller and Malone still share ownership of Expedia.com.
IAC has been sitting on about $2 billion in cash, a highly unusual situation. Diller said that Malone’s Liberty “would rather invest their cash rather than have us invest their cash. “
Also on Thursday, Diller stepped down as CEO and appointed Greg Blatt, formerly Match.com's CEO, in his place. Diller's title is now chairman and senior executive.
The billionaire said it was time to leave the managing to someone else and refocus on growing the company.
“What I used to do was create value,” he said. “That’s how we built this business up from $47 million to $15 billion. I want to go back to do that. That’s healthy for the company, and it allows for succession planning.”
He added: “This is the best thing that’s happened to this company in five to seven years,” he said. “Being able to vote shares, to control the company through a proxy is different than owning the shares themselves. For me personally, and my family, it’s significant. “
Malone and Diller clashed in 2008 when Malone tried to get Diller and six of his directors thrown off the board of IAC, claiming Diller was mismanaging the company. A Delaware court ultimately threw the lawsuit out.
But Diller denied that the buy-out Thursday was the result of any bad blood.
“I haven’t been having rocky relations with John Malone,” he said. “We had one unfortunate period which lasted three months out of 17 years.”
He went on: “Liberty said three years ago that IAC was not a strategic investment for them. We had a complex arrangement where I could get the supervoting stock. And that’s essentially what happened.”
Diller built IAC through a string of acquisitions and transactions, and spun off names like Ticketmaster TKTM.O, HSN (HSNI.O) and LendingTree.
Lately he merged his start-up online news magazine The Daily Beast with Newsweek, to take a half-ownership stake in the newsweekly.
But Diller acknowledged that even if that were to turn profitable, it would hardly be a significant source of revenue for IAC.
“I love Newsweek. I love that we’ve done it. I have great hopes for it. But let’s face it, it’s hardly big money. It’s not a significant investment.”
Diller said he would be looking at more Internet search- and transaction-based commerce for new investments, but was hardly limited to that.