Ah the media, we love a ruckus. We really do. And when the two pugilists are characters as colorful and savvy as Dish Network’s founder Charlie Ergen (left) and Siriux XM Satellite Radio CEO Mel Karmazin (right) we do really get excited.
So after two weeks of following all the twists and turns of Sirius XM’s attempts to avoid bankruptcy, CEO Mel Karmazin decided on John Malone, founder of Liberty Media, to come in as Sirius XM’s white knight with a $530 million loan . The loan will cover the satellite radio provider’s looming debt and help it avoid bankruptcy. As part of the deal Liberty will eventually take a 40 percent stake in Sirius’ equity.
Media titans John Malone and Barry Diller knew they had their fair share of disagreements over the years, but like many couples heading to divorce, they apparently needed someone else to tell them that.
John Malone is famous in the media industry for his complex deal-making skills that have confounded some of the best minds in business. But he seemed almost forlorn in Delaware court today when talking about the unraveling of his relationship with Barry Diller, the former television and film honcho who built up IAC/InterActiveCorp with his backing.About halfway through a rigorous cross examination by Marc Wolinsky, who was representing IAC, Malone’s responses gave us the impression that his lieutenant and CEO Greg Maffei had a hand in precipitating a difficult business dispute into all-out war. Here are some chapter headings from his direct testimony and cross-examination:The tension dates years back to Maffei’s role in Expedia’s sale to IAC. When Maffei was appointed CEO of Liberty Media in 2005, Malone said Diller branded it a “poor choice.”“I knew there was a history. I knew that Barry was complaining that there was no cooperation between Expedia and Hotels.com … he thought that was wrong. I’m not sure I was aware of any personality difference until much later.”By 2006, Maffei was making comments that questioned the solidity of Diller’s control over IAC, under a proxy agreement to vote Liberty shares. Barry had some feelings about that.“Mr Diller was very unhappy or upset that Mr Maffei would make these … claims or references, anything that would undermine his confidence that he had the voting power.”When Maffei and Liberty counsel suggested a way to weaken Diller’s proxy, Malone said he objected.“I told them that I regarded it as brain damage. (So what did you do when Maffei persisted in his argument?) I would assume that he has something in mind in terms of it being a viable legal argument, or because our lawyers are telling him they believe it’s a valuable and appropriate legal position.”By late 2007, Maffei took a more aggressive stance when it came to pushing Diller to compensate Liberty for the declining value of its IAC stake, Malone said.“I would say Mr Maffei believed it was in the interest of Liberty to try and separate our interests from IAC and Expedia. I think Mr Maffei can be pugilistic where these issues are concerned.”Because at the end of the day, Malone would be happy to make up with good ol’ Barry. Asked if he preferred to litigate their dispute in Colorado rather than Delaware, he said:“I didn’t want to have to sue Mr. Diller anywhere. I still hold him no ill-will and I still seek a win-win solution for our disputes. I don’t think any of us likes that we are having an open dispute after 13, 14 years of building value together.”Cue one Denver sunset please.(Photo: Reuters/John Randolph/ Liberty Media Corporation Chairman John Malone returns to Chancery court in Wilmington Delaware)