Barry Diller took the witness stand this afternoon in the Delaware Chancery Court to tell his side of the story of a disintegrating marriage—his 13-year partnership with John Malone, chairman of Liberty Media Corp.

Dressed in blue suit and blue and white tie, Diller's testimony was often more emotional and witty than Monday's testimony from Malone. Diller was often laughing and creating laughter in the courtroom gallery.

Malone and IAC/Interactive Corp, the $5 billion company built by Diller with Malone's backing, have filed dueling lawsuits, a showdown billed as the Clash of the Moguls.

Diller, for one, still holds hope for his relationship with Malone, whom he got to know in the early 1990s because both men are boating enthusiasts.

In the midst of a contentious cross-examination, Kevin Abrams, Liberty Media's lead lawyer, asked Diller what he envisioned of his relationship with Malone. Diller called that "a good question," and paused for a pregnant moment. "Well, I have hopes for it. That's the honest thing I can say."

In fact, Diller testified that talks continued "Up until the other day, and probably today as well, depending on the circumstances," to end this marriage in an amicable divorce, a deal in which Liberty Media would get the Home Shopping Network in a swap for its shares in IAC.

The lawsuits follow Diller's proposed plan to spin off four businesses from IAC, each having a one-tier voting structure, wiping out the super voting stock now held by Liberty Media and its majority voting position in IAC. Under their partnership, Diller has a proxy to vote the Liberty Media stock.

Even as IAC's stock price stalled, and as Liberty Media C.E.O. Gregory Maffei complained publicly and privately about that performance, Diller said he viewed his partnership with Malone as a "first-rate relationship."

That all changed on the morning of October 27, 2007, when the Wall Street Journal ran a page-one story under the headline "Can This Marriage Be Saved?"

Both Maffei and Malone were critical of IAC in the lengthy article, and Malone was quoted in the story saying this: "The hook is set. It is our company. Barry ain't going to be able to spit the hook."

Diller, on the witness stand, said "I expected John Malone to call me and apologize" Diller said he spent the next two weeks, like in a scene out of a movie, "waiting for the phone to ring."

At the time the article ran, IAC management was considering the spinoffs with a single tier voting structure. The article was the final straw: "They are trying to manipulate me. It's just too clear. It pushed me further."

Diller called the Journal story a "nasty article," and wondered, on the stand, "How could they be that mean? How could they be that hostile? I was embarrassed by it.

The next time he heard from Malone was December 21, when he conveyed, at some point in the conversation, the one-tier structure. At that moment, Diller told Malone, "You lost me."

In reply, Malone said they were headed toward a "messy public proxy fight." And Diller told him that he didn't care.

By the time of the December 21 call, Diller had already relayed the single-tier structure to former General Electric C.E.O. Jack Welch, who serves as a consultant to IAC and, Diller testified, is paid $1 million a year for his services.

Diller said he never would have agreed to give Liberty veto rights over his decision, as Liberty claims. Diller said the provision Liberty cites to back up its claim was intended to address regulatory concerns. Specifically, he added, concern about regulations barring cross-ownership of broadcast companies.

The provision was last modified in 2001, when IAC acquired an interest in Vivendi Universal Entertainment. Diller contradicted earlier testimony from Robert Bennett, Liberty Media's former chief executive, who said he had a conversation with Diller about the catchall veto provision.

"Did that conversation occur, Mr. Diller?" Theodore N. Mirvis of Wachtell, Lipton, Rosen & Katz, asked.

"No," Diller responded.

"Are you sure?" Mirvis asked.

"Absolutely," Diller said. "I would not have done the transaction—if anybody would have whispered it, an alarm bell would have gone off in my head."

Until 2001, Liberty had this transactional veto power, but gave it up in the Vivendi deal, with one caveat: It was subject to keeping IAC's debt under a certain limit.

Diller said he didn't have a problem with that. "That was okay with me," he testified. "I am fairly famous as someone who does not like excessive leverage."

Mirvis also tried to soften some of the blows made by Malone earlier in the week, such as his testimony that Diller had refined use of the corporate plane into a "fine art."

Diller said his salary at IAC has never gone about $900,000 and put total compensation, including perks such as the use of the corporate jet, at about $3 million a year.

Abrams, of Wilmington, Delaware's Abrams & Laster, tried to suggest that Diller had taken more than $1.3 billion in stock option gains from IAC as the company's stock tanked. Diller wasn't cooperating. He said he could not, for instance, recite yesterday's closing price of IAC. "I don't track it daily," Diller said.

The Wachtell lawyers objected to the chart used to show the value of the options, created by Daniel Fischel of the economic consulting firm Lexecon. Fischel was hired as an expert who was originally scheduled to testify until the parties agreed to a shortening of the trial. Wachtell first saw the chart at noon yesterday.

Vice Chancellor Stephen Lamb, who is presiding over the case, said there was a "certain unfairness" in the use of the chart, but allowed it.

Diller harrumphed when Abrams referred to $295 million in compensation he made in 2005, saying most of it came from options he exercised at the end of their 10-year period. "Look at it over 10 years if you want to make a real comparison!" Diller said, laughing sarcastically.

Liberty has presented the spinoffs and single-tier stock as Diller's plan to get "hard" control over IAC. On the stand, Diller didn't deny that, but doubted whether he could succeed in getting it.

The spinoffs, he said, were more an effort to allow each business—including Lending Tree and HSN, which runs the Home Shopping Network—to have their own management and get their own valuation in the market, separate from Liberty. "These are fresh little babies," he said. "I want them to be able to have the time to function as public companies."

At the end of the day, Abrams pressed Diller on Malone's history as a persistent investor. When he asked Diller whether he agreed that Maffei is "tenacious," Diller shot back, "I have no comment."

It's clear Diller has no illusion about repairing his relationship with Maffei. In fact, he disputed that they had a relationship, noting that they had met just three times. "Three times and change does not make a relationship," Diller said.

At the last of those meetings, a lunch where Diller arrived on a motor scooter, Maffei made a crack about buses and scooters—a crack that referred to a clause in the proxy that would give voting power back to Liberty in the event of Diller's death or disability.

"I don't really remember," Diller said, his tone exasperated. "It was a joke."

Diller is scheduled to return to the stand on Friday.