Can Diller Buy Malone Off With Home Shopping Network?

There has been some speculation that Barry Diller might be able to keep control of IAC/Interactive (IACI) without fighting with majority shareholder Liberty Media, if he hands over his largest division, The Home Shopping Network. Liberty, controlled by John Malone, might think it would get the better part of the deal.

According to The Wall Street Journal the two companies "might negotiate a deal in which Mr. Malone would take control of HSN and possibly another asset in return for giving up its majority voting stake in IAC." Pretty nifty.

The problem is that HSN is a dog. A look at the pro forma numbers provided by IACI show that in the fourth quarter HSN revenue rose only 3% to $905 million. Operating income fell 7% to $79 million.Malone would be giving up his control of IACI, which is worth $6 billion, and not be getting much in return.

Malone also owns QVC, another home-shopping operation. There is no evidence that is net customer gain in owning both networks would be significant. On the other hand, he might have a large net gain in the number of people who sit in front of TVs looking a pictures of cheap jewelry and giving out their charge card numbers.

Malone is better off mounting a proxy fight.

Douglas A. McIntyre