By Michele Gershberg

WILMINGTON, Delaware (Reuters) - Liberty Media Chief Executive Greg Maffei said on Wednesday that he was the point man in talks with IAC/InterActiveCorp over disengaging the two companies despite a long-standing relationship between Liberty Chairman John Malone and IAC CEO Barry Diller.


"John Malone considered Barry Diller a friend" after a business partnership of nearly 12 years, Maffei told a Delaware court, where IAC and controlling shareholder Liberty are battling over a proposal to spin off four of IAC's businesses.

"While (Malone) was not entirely happy and increasingly unhappy with the performance at IAC ... because of the friendship, I don't think (he) was willing to tackle some of the issues," Maffei said. "I have been in effect the point person. I don't believe it's a personal matter."

Liberty's board put him in that role despite concerns of a potential conflict between Maffei and Diller. The two had clashed over IAC's purchase of online travel site Expedia several years before.

IAC and Liberty sued each other in January after Diller proposed a spinoff plan that would dilute Liberty's majority voting control over the businesses as separate entities.

The plan followed more than a year of inconclusive talks on a possible swap that would give IAC's HSN shopping network to Liberty in return for Liberty's stake in IAC.

Diller, a former television and film executive, built IAC with Malone's backing over more than a decade. While Liberty owns about 30 percent of IAC shares, it holds 62 percent voting control through a second class of super-voting stock.

During the course of the trial that started on Monday in Delaware Chancery Court, Malone testified that he and Diller had early on agreed to a proxy agreement that let Diller vote Liberty's controlling stake in the company and gave him wide latitude in running IAC.

Maffei was called to the stand late on Tuesday by IAC, which has stressed a history of personal disagreement between Maffei and Diller as a key factor in the unraveling ties with Liberty. His testimony continued early on Wednesday.

Liberty has argued that it aims to preserve the value of its IAC holding after years of seeing the shares lag the Nasdaq and that Diller violated their proxy agreement by proposing to dilute its control over the IAC spinoffs.

(Editing by Lisa Von Ahn)
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