Now It's Malone and Diller Who Are Dancing

Remember when John Malone and Rupert Murdoch was dancing around an asset swap? The one that would give Liberty Media something substantial in return for its shares in News Corp.?

After going round and round for a bit, the fancy footwork resulted in Malone getting the controlling stake in The DirecTV Group (DTV/NYSE).

Now The Wall Street Journal reports that Malone and Barry Diller doing a dance. A little bit different, but similar just the same. Diller runs IAC/InterActiveCorp -- in which Malone's company owns the controlling stake.

According to the linked story, Malone isn't content with Diller's performance. And Diller is less than happy himself:

"There was a time when there was, I think, a 20 percent Barry premium" on Wall Street, Mr. Malone noted during a recent interview in his Englewood, Colo., office, which looks out at the Rocky Mountains. "Today you could argue there is a Barry discount."

Mr. Malone is looking to unwind the complex business ties that link him to Mr. Diller. So is Mr. Diller, who eventually wants his independence. "We've been frustrated with each other at times," says Mr. Diller, who hastens to add that he believes the relationship is still working.

But thus far, they haven't been able to figure out how to split up. Years ago, Mr. Malone gave Mr. Diller the power to vote Liberty Media's shares in IAC. An asset-swapping deal that took shape earlier this year fell apart. And now Mr. Malone is asserting his influence. "The hook is set. It is our company," he says of IAC. "Barry ain't going to be able to spit the hook."

That points to the difference between this situation and the one with Murdoch. That was a case of Murdoch being uncomfortable with Liberty Media's stake in his company. This one has Malone in an even stronger position.

What's going to happen? I have no idea. But I'm comfortable with John Malone, and certainly appreciate the steps he's taken to realize value since recommending Liberty Media on this blog. (As you know, Liberty Media has split its assets into two tracking stocks since then -- both of which I continue holding and view as a single portfolio position.)

And I think that will be the case regardless of how long he and Diller tiptoe around each other.