Diller-Malone Marriage Disected in the 'Journal'

Frenemies: They're not just for high school anymore.

Just listen to what Liberty Media chairman John Malone has to say about his longtime business partner and sailing buddy, Barry Diller:

"There was a time when there was, I think, a 20 percent Barry premium," he tells The Wall Street Journal. "Today, you could argue there is a Barry discount."

After a decade and a half of happily making money together, Malone is fed up with Diller, who, as chairman of IAC/InterActive Corp., has, in Malone's view, been doing a crummy job of late creating value for investors, including Liberty, which holds a controlling 23 percent stake.

Unfortunately for him, Diller has voting power over those shares, and will until he quits or dies. That leaves Malone without many options, besides undercutting Diller in the press with quotes like "Barry doesn't use his balance sheet effectively. He is not a financial guy."

Or does it? Malone seems to think he might be able to force Diller to make a swap with favorable terms, using Liberty's IAC stake as a carrot and the threat to sell that stake to a third party as a stick. Such a sale just might nullify Diller's proxy power.

Diller thinks otherwise, which is why he has so far resisted Malone's suggested terms, and why he sounds so much more conciliatory in the Journal. "We've been frustrated with each other at times" is about the most vitriol he can summon.

Meanwhile, Malone muses about Diller getting hit by a bus, and pictures him as a game fish who doesn't know that he's already dead: "The hook is set. [IAC] is our company. Barry ain't going to be able to spit the hook."