For good reason, much of the coverage of the court battle between John Malone's Liberty Media Corp. and Barry Diller of  IAC/InteractiveCorp has focused on the outsize personalities involved and the bitterness of the dispute between the two erstwhile allies. But this is also a case of two hyper-clever corporate dealmakers (three, if you include Liberty CEO Greg Maffei) trying to move their companies forward in a fast-changing industry, only to be tripped up by some complex, interlocking mechanisms for ownership and control that must have seemed like a great idea a decade ago.

In TheDeal.com, Richard Morgan details the current state of play. Diller went to court in Delaware last week for permission to collapse IAC's dual-class shareholder structure on four units it plans to spin out of IAC, inluding HSN home shopping network and LendingTree. Liberty, which owns about 30% of IAC but controls 61.7% of the shareholder vote by virtue of its lock on the supervoting Class B shares, responded with a legal broadside on Tuesday. Liberty wants to boot not just Diller but also his board, and contends that Liberty now controls IAC.

So how did it come to this?

Diller (photo right) built a new TV network at Fox in the 1980s and early 1990s. Malone (photo left) built cable TV behemoth TCI, which he sold to AT&T Inc. in 1998. But for their next acts, both men went on to amass collections of promising media assets without any cohesive operating logic. In recent years, both have had to respond to stock market pressures to restructure and create real operating companies from those assets. Morgan explains Diller's plans for IAC in this November 2007 article. In another November article, The Deal's Chris Nolter described the restructuring of Liberty.

Blame Diller for starting the current battle by overplaying his hand. But it's also the kind of thing that happens when strategies change, the interests of a couple of partners diverge, and structures that made sense under one set of circumstances no longer seem as clever. - Kenneth Klee

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