It's a few weeks before Barry Diller almost lost everything, and he is in his element, at the Four Seasons restaurant in midtown Manhattan. Movie producer Harvey Weinstein is here, as is activist investor Carl Icahn. Diller, uncharacteristically, is sharing the spotlight with CBS chief Les Moonves in a panel discussion about the future of media.

Eventually, the subject turns to Diller himself, whose future at this moment looks precarious. For once, a man who has made a career of micromanaging his own myth is scriptless. The following week, a state court judge in Delaware will hear a lawsuit between Diller and John Malone, the media executive and erstwhile Diller ally who is threatening to strip Diller of everything: his control of IAC/InterActiveCorp, the internet company the two have been bickering over; Diller’s perch inside the Frank Gehry-designed IAC building, on Manhattan’s West Side; his reputation as one of the last of the badass brawlers in the media world; and perhaps most important, his peerless—and until now nearly flawless—ability to craft and maintain his own legend, even if IAC’s performance of late hasn’t exactly seemed to warrant it. (View slideshow.)

“It’s very odd that two people who don’t want to give up control of anything are giving control to a judge in Delaware," Diller says. “It’s unfortunate.”

Within a few weeks, Diller was vindicated. In late March, the judge ruled in his favor, Malone was forced to give up his fight, and an embarrassing public showdown ended. But Malone and his colleagues at Liberty Media had managed to use the trial to get to the heart of the Diller myth. With testimony and evidence that seemed relevant only in its capacity to embarrass the mogul, Diller’s adversaries made an issue of his huge paycheck and lavish lifestyle, as contrasted with the subpar performance of IAC, which has recently been an unqualified disappointment. (View an interactive feature explaining the ups and downs of Diller’s career.)

A few weeks after the court’s ruling, in a conference room just outside his spacious office in the IAC building, Diller still has the air of someone who has just survived a car crash. Instead of dismissing every third or fourth question with his trademark disdain, he is displaying an un-Dillerlike mellowness. “It was absolutely not something we sought,” he says somewhat quietly when I ask about the trial. “The only thing that remains is that it’s over.”

Diller then proceeds to make an astonishing admission: After all this time spent selling the world on his idea of an internet conglomerate, he now realizes that he was wrong from the start. Diller says he’s utterly committed to the idea of an anticonglomerate, blowing up IAC and leaving the company’s dispar­ate parts to operate on their own. “We decided, ‘Enough of this integrated-conglomerate pretension.’ We were kidding ourselves if we thought we could pull off an integrated conglomerate that acts like G.E. or P&G in anything less than 10, 20, or 30 years. It took them 100 years to get there.” (Read Lloyd Grove's interview with Diller, here.)

If Diller were running for president, his rivals would label him a flip-flopper, and they would be right. But Diller is no politician, despite a personal magnetism that is reminiscent of Bill Clinton’s. Nor is he a typical businessman. Rather, he is a bundle of contradictions. He is a onetime internet visionary now accused of being a has-been. He is a Hollywood showman out of context in the nerd’s world of the internet. He is a dealmaker masquerading as a day-to-day executive. And more recently, he has become a man whose outsize legend has seemed increasingly at odds with his ability to deliver the goods.

But now, at the age of 66, he has a new plan—to dismantle his 13-year-old company and create five separate units. The part Diller himself will continue to run will be made up of a number of relatively small entities. With so few pieces to keep track of, this so-called new IAC will be a model of transparency compared with the old one.